AIA Position

The American Institute of Architects (AIA) believes that governmental policies, programs and incentives should encourage energy efficiency, especially as it relates to the built environment. To this end, the AIA supported legislation enacted in 2005 that allows for a tax deduction for constructing energy-efficient commercial buildings and for installing energy-efficient systems in existing buildings; this deduction, however, expires on December 31, 2008. The AIA believes that Congress should make this deduction permanent, or at least extend it until 2013, and increase the size of the deduction to increase its effectiveness. The AIA also supports efforts to amend the U.S. tax code to allow for the accelerated depreciation of new, energy-efficient green buildings and energy-saving equipment for renovated buildings.

Actions Sought

As mentioned, the AIA strongly urges Congress to pass legislation that makes the energy-efficient commercial buildings tax deduction (26 U.S. Code §179D) permanent, or to at least extend the deduction until 2013. Congress should also increase the dollar amount per square foot allowed for the deduction from the current $1.80 per square foot to $2.25 per square foot.

Congresswoman Allyson Schwartz (D-Pa.) has introduced H.R. 539, the Buildings for the 21st Century Act, which extends the tax deduction until 2013 and expands it to $2.25 per square foot. We at the AIA encourage Congress to act on and pass this legislation, and have similar legislation introduced in the Senate.

The AIA also supports tax deductions for energy-efficient residential buildings as well as energy-efficient appliances.

Explanation and Justification

The federal government has the ability to encourage energy-efficient practices in the private sector. Congress demonstrated this in 2005 by approving a tax deduction for energy-efficient commercial buildings within the Energy Policy Act (P.L. 109-58). This tax deduction allows for building owners to claim a tax deduction of $1.80 per square foot of building area for the installation of systems that reduce the total energy and power costs by 50 percent or more when compared with a reference building.

Energy costs are on the rise nationwide. By making the energy-efficient commercial buildings tax deduction permanent, Congress has the power to help both the environment and the economy. Energy-efficient buildings cost less to operate, use less energy, reduce the emission of greenhouse gases, improve comfort, and protect the energy security of our nation. Extending this tax deduction will send a message to the American people that Congress is serious about encouraging energy-efficient practices and is willing to offer real incentives to facilitate the expanded use of greener alternatives. To this end, Congress should also increase the allowable deduction from the current $1.80 per square foot to $2.25 per square foot for qualified energy-savings systems, as this will even further encourage the construction and installation of energy-efficient systems.

It should also be noted that extending the current commercial building tax deduction would lead more businesses and individuals to invest in energy-efficient systems. It often takes years to bring a building on-line, from initial design to final construction. Since the deduction is applied at the time of occupancy, extending the life of the deduction beyond 2008 will ensure that buildings designed today will be able to take advantage of it.

A number of bills were introduced during the 109th Congress, by members of both parties, to extend the energy-efficient commercial buildings tax deduction. The AIA will continue to work with the sponsors and cosponsors of these bills during the 110th Congress to ensure that this important tax deduction is prolonged. The extender bills introduced in the 109th Congress include:

• S.2398, “The Energy Competitiveness Act of 2006”;
• S.2401, “The Alternative Energy Extender Act”;
• S.2571, “Breaking our Long-Term Dependence Energy Act of 2006”;
• S.2829, “Clean Energy Development for a Growing Economy Act of 2006”;
• S.2993, “Strategic Energy Fund Act of 2006”;
• S.3268, “EXTEND the Energy Efficiency Incentives Act of 2006”;
• H.R. 5809, “Energy Efficient Buildings Act of 2006”.

What America Thinks

In a nationwide poll of voters (1,000 sample, margin of error +/- 3.1) conducted January 3-5, 2006, by two respected national pollsters — The Tarrance Group, a Republican firm, and Lake Snell and Perry, a Democratic firm — 84 percent expressed support for “new tax breaks to encourage the design and construction of buildings that significantly reduce pollution and energy consumption.”

In addition, 71 percent of those polled believe that “global warming is already having an affect on weather, and government should immediately put into effect new energy policies that drastically reduce greenhouse gas emissions that may be causing climate damage.”