Legislative Update: Energy Efficiency
Energy efficiency is a top priority for all governmental bodies. Depending on state law, many local jurisdictions choose to adopt one of the national building codes or piecemeal their municipal building code. Organizations such as the International Code Council, the International Building Code, International Energy Conservation Code, and Southern Building Code offer guidelines for new construction or existing building retrofits. Governments tend to use these codes for their own guidelines. Every couple of years national building code standards become more complex, creating a building code technicality conundrum.
Beyond the building code guidelines, bragging rights for “green” properties come from certification programs such as Leadership in Energy and Environmental Design, Energy Star, and Home Energy Rating System. As prestigious as some of these certifications may be, property owners should perform a cost-benefit analysis before pursuing them. Investments for energy efficiency must be strategic over the long run. Often the payback period far exceeds the investment horizon, so property owners maintain the status quo.
During the State of the Union address, President Obama talked about the Better Buildings Initiative, which includes several energy-saving goals, such as achieving a 20 percent improvement in energy efficiency in commercial buildings by 2020. It also creates financing opportunities for commercial retrofits through the Department of Energy ( www.dsireusa.org).
In addition, there are hundreds of energy-related legislative bills floating throughout state capitols. Several states have adopted energy efficiency requirements for public buildings, hoping the private sector eventually will follow suit. States adopt compliance plans that may refer to “the most recent edition” of an applicable building code, or implement codes on a case-by-case basis. California was the first state to adopt a mandatory statewide green building code, which became effective this year. Several energy-related state legislative proposals enacted this year will be of interest to CCIMs:
- (H 502) - Exemption from sales tax for residential solar energy equipment
- (H 972) - Authorizes the Department of Housing and Community Development to adopt International Green Construction Code; authorizes local jurisdictions to adopt and make local amendments to the code
- (H 568) - Provides rebates for renewable energy technologies to electricity customers
- (H 1366) - Establishes municipal energy district authority to make loans to finance renewable energy sources for retrofits to residential, commercial, or industrial property
- (S 94) - Adopts the IECC 2009 as the voluntary standard applying to construction of new residential buildings
- (H 179) - Authorizes that local governments have the ability to provide energy improvement loans to owners of existing residential, commercial, or industrial buildings
Local governments are looking at these issues as well. Many have incorporated the Environmental Protection Agency's Smart Growth principles in their development plans as community planners consider ways to conserve resources on a local level. This means curbing urban sprawl and developing neighborhoods that foster sustainability. Some cities, including Seattle, Washington, D.C., and New York City, have implemented a requirement of information disclosure for the energy performance of privately owned buildings.
But if commercial real estate professionals are expected to fully embrace the future of sustainable buildings, law makers need to understand how green initiatives affect the industry. An integrative approach to making a significant change includes tax credits for energy-efficient building codes.
During the 2011 CCIM Institute Capitol Hill Visit in April, CCIMs talked with their U.S. representatives and senators about incentive-based programs versus mandated requirements for energy-efficient buildings. Participants told Congress that tax credits must be realistic, supplementing the discrepancy between the payback period and initial cost investment paid by property owners. CCIMs can contact their state and local officials to express the need for sensible tax incentives for energy-efficient building investments that contribute to a shared vision of a sustainable community.
Adriann Gerardi is the legislative liaison for the CCIM Institute. Contact her at firstname.lastname@example.org.