Kudos from Multifamily Organizations for Administration’s Green Building Initiative

Washington, DC–The Obama administration released a plan late last week to encourage commercial properties to be more energy- and resource-efficient, a move that has been welcomed by two multifamily industry organizations as well as the U.S. Green Building Council, the nonprofit that oversees sustainable building standards. The plan addresses the fact that commercial properties, including multifamily residential structures, use about 20 percent of all the energy used in the United States.

The plan, called the “Better Buildings Initiative,” has energy reduction as a primary goal. According to the administration, it is possible to make U.S. commercial buildings 20 percent more energy efficient by 2020, which would cut companies’ and business owners’ energy bills by an estimated $40 billion per year in current dollars if achieved. The plan would replace various existing green incentives deemed outdated with newer incentives, including tax credits, a grant program and better access to retrofitting finance.

Since much of the authority to change codes, regulations and performance standards lies with state and local jurisdictions, the administration is also proposing grants to state and local governments that streamline standards, encourage upgrades and attract private-sector investment. A number of other reforms are also part of the plan, including improving transparency around energy-efficiency performance; launching a Building Construction Technology Extension Partnership modeled on the successful Manufacturing Extension Partnership at the U.S. Department of Commerce; and providing more workforce training in areas such as energy auditing and building operations.

The National Multi Housing Council and the National Apartment Association have announced their support for the administration’s plans and its goals. “Energy consumption and energy policy are priority issues for the apartment sector,” NMHC/NAA’s vice president of energy and environment, Eileen Lee, says in a statement. “The plan announced today includes several items long advocated by NMHC/NAA, most notably reforming the existing building-efficiency tax incentives.”

In particular, the organizations are fond of the plan’s proposal to reform the existing Section 179(d) building-efficiency tax incentive, which has largely gone unclaimed by property owners for various reasons. Changing the deduction to a more generous tax credit and creating more incentives for owners to undertake costly retrofits on existing properties are welcome changes, says Lee. The president’s plan would also ensure that REITs can take advantage of the credit.

The organizations stress that it is important that the plan doesn’t rely on mandatory federal building code regulations, which they termed “unworkable.” As it happens, some of the states are ahead of the federal government in that regard, such as California, whose CalGreen building code became mandatory at the beginning of this year. CalGreen applies to both commercial and residential new construction, including multifamily, with the aim of improving their energy performance, making their interior environments healthier, and making the construction process more eco-friendly.

The U.S. Green Building Council, whose Leadership in Energy Efficiency and Design (LEED) form the de facto set of standards for green building in this country and elsewhere, also supports the Better Buildings Initiative. “For all of those committed to the idea that green buildings can create jobs, save energy and save money … major steps like these are necessary to address the challenges facing our environment,” says USGBC President, CEO and founding chair Rick Fedrizzi in a statement.