More About the Better Buildings Initiative

Mon, 2011-06-13 10:23


As if staggering unemployment, rising oil prices and continued conflict in the Middle East don’t give us enough to worry about, we are also expected to worry about the carbon footprints of our homes, our lives and our commercial buildings.

While retrofitting existing buildings or constructing new buildings in an energy efficient manner is certainly a laudable feat, access to financing often proves an insurmountable roadblock. To make matters more difficult, between now and 2014, $1.4 trillion in commercial real estate (CRE) loans are coming due. What is more, half of these loans are underwater and commercial vacancy rates show little sign of improvement.

However, energy efficiency measures go a long way towards improving the state of affairs. More energy efficient buildings reduce utility bills and save corporations money where money is already tight. Energy efficiency retrofits create jobs and help ease the 22.5% unemployment seen in the construction industry.

The Better Buildings Initiative
To create jobs, help finance the green economy and aid commercial buildings facing default, The Obama Administration proposed the Better Building Initiative. This is essentially a series of commercial building efficiency tax credits intended to encourage owners of commercial buildings to make necessary retrofits to build more energy efficient structures.

How It Works
The BBI offers tax credits that encourage efficiency measures. The greater the increase in efficiency, the more tax credit per square foot. For example, a 20%-29% reduction in energy use receives $0.60 per square foot credit, a 30%-49% reduction in energy use receives a $0.90 per square foot credit and a reduction of 50% or more received a $1.80 per square foot credit.

Congress must pass this plan for it to take effect. These tax credits would replace the current commercial building tax credits contained in Section 179D of the Internal Revenue Code.

What It Promises To Do
The BBI promises not only to pay for itself, but also to reduce the deficit by $2.6 billion. It sounds almost too good to be true. However, the BBI estimates that these measures will:

  • Create 303,551 jobs
  • Increase after-tax cash flow
  • Increase property values
  • Reduce loan defaults
  • Increase commercial real estate desirability, investment values and sales
  • Decrease building energy consumption and operation costs.

Further, experts estimate that for each $1 billion in BBI commercial building efficiency tax credits, the program will generate $16.4 billion in new private spending and $3.6 billion in new federal tax revenue. This leads us to the $2.6 billion deficit reduction (after the $1 billion credit is given.)

The Bottom Line
We need to create jobs, we need to reduce the staggering deficit, we need to generate cash for companies and we need to go green. This seems daunting and almost impossible. However, the Better Buildings Initiative proves that, yes we can:

  • Create Jobs: By encouraging companies to make necessary retrofits, hundreds of thousands of construction jobs are created.
  • Reduce The Deficit: By increasing property values, we increase property taxes. By increasing private spending and personal income we add to the available tax base.
  • Generate Cash: Encouraging retrofits increases private spending and reduces operational costs. This creates cash flow for the owners of commercial buildings and the contracted workers.
  • Go Green: By creating more energy efficient buildings, we reduce carbon emissions that increase global climate change, create a healthier work environment and create more efficient buildings that save energy.

If you are interested in learning about corporate sustainability or commerical energy auditing, call us today at 800-460-2575.

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