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BOMA: Energy Efficiency Tax Incentives Spur Economic Growth and New Jobs
The Building Owners and Managers Association (BOMA) International, in collaboration with other real estate industry groups and with support from a grant from software developer Yardi, has released a groundbreaking study on the costs and benefits of modernizing and extending the Energy Efficient Commercial Building Tax Deduction, commonly referred to as 179D after its U.S. Internal Revenue Code section number. The study, which was conducted by Regional Economic Models, Inc. (REMI), estimates that as many as 77,000 jobs will be created and $7.4 billion will be added annually to the national gross domestic product (GDP) if Congress passes a long-term extension and modification of 179D.
First enacted in 2005, 179D allowed commercial building owners to offset some of the costs of energy efficiency retrofits. Over the past decade, it became an important tool for reducing energy consumption and greenhouse gas emissions in the built environment. 179D was the only federal incentive for commercial building owners to improve the energy efficiency of their properties. BOMA International, a long-time supporter of the tax deduction, currently is working with lawmakers in the U.S. Congress to encourage the extension of the incentive, which expired in 2016. It also is calling for a revision of the language to expand the pool of owners eligible for the incentive and increase the deduction from $1.80 per square foot to $3 in order to encourage even more ambitious retrofits. In its current form, the requirements to earn a tax deduction are out of reach for many existing buildings, which account for 98 percent of all building stock.
Strengthening and modernizing Section 179D would come with huge benefits, according to the study, such as adding $5.7 billion in personal income for the first ten years after enactment. Additionally, it is estimated to lead to an average annual gain of 39,388 jobs, $3.7 billion in GDP and $3 billion in personal income for the first ten years after enactment.
“This study confirms what we’ve already been seeing in the marketplace: 179D is good for the industry, the economy and the environment,” said BOMA International Chair Brian M. Harnetiaux, senior vice president of Asset Management at McCarthy Cook. “Section 179D has proven to be a valuable industry resource, and with an extension and some adjustments, it will continue to drive the commercial real estate industry forward.”
The study was co-funded by the American Institute of Architects, along with Alliant Group LP, Ameresco, Blue Energy Group, Concord Energy Strategies, Energy Tax Savers, Energy Systems Group, National Electrical Manufacturers Association, the Natural Resources Defense Council and the United States Green Building Council.
Find the study in its entirety on the BOMA International website.