How to Create Jobs and
Reduce Deficit Spending
An independent analysis
conducted by Architecture 2030 illustrates that the Administration’s Better Buildings Initiative
(BBI) can put the nation’s commercial real estate (CRE) market on the road to recovery, creating at least 300,000 new U.S. jobs and boosting tax revenue to begin putting money back into federal, state, and local coffers
This comes as the nation’s ongoing CRE crisis continues to threaten the recovery, with $1.4 trillion in CRE loans becoming due between now and 2014 (half of which are underwater) and commercial vacancy rates showing little sign of improvement. Meanwhile, those hardest hit – construction workers, small businesses, and small banks – are still bearing the brunt of this debacle. Construction unemployment is now at 22.5% and, in the first two months of 2011 alone, another 23 community or regional banks shuttered their doors (for a total of 320 bank failures
The Administration’s BBI plan, unveiled early last month, spurs CRE recovery by leveraging a commercial building efficiency tax credit of $.60 to $1.80 per square foot for meeting energy reductions of 20% to 50% below the ASHRAE 90.1-2004 standard. The Administration’s initiative mirrors similar CRE tax incentives called for by Architecture 2030 in the CRE Solution
"This is a great opportunity for Congress to create hundreds of thousands of jobs and resuscitate Commercial Real Estate without adding additional burden to the U.S. deficit."
Founder and CEO, Architecture 2030
In a Fact Sheet
published today, Architecture 2030 reports 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.
The program will not only pay for itself, but also reduce deficit spending by $2.6 billion
. Additionally, each $1 billion in CRE tax credits would:
- Create 303,551 jobs*, quickly and cost effectively,
- Increase after-tax cash flow and property values,
- Reduce loan defaults,
- Increase CRE desirability and investment value,
- Increase new CRE sales (by narrowing the gap between the bid and ask price of CRE property),
- Bring ESCo's and A/E/C firms into the CRE market,
- Decrease building energy consumption, greenhouse gas emissions, and operating costs,
- Generate $1.2 billion in state and local government tax revenue, and
- Generate $4.8 billion in total tax revenue before the $1 billion tax credit is given.
Although commercial buildings are often thought of as big-box stores or high rises in city centers, 90 percent are actually smaller than 25,000 square feet. These are mostly one- and two-story, single- or double-occupancy buildings that are easy and inexpensive to add on to and/or renovate. If Section 179D is amended, the tax credit would apply to property placed in service on or before December 31, 2013.
For the Architecture 2030 Better Buildings Initiative Fact Sheet and companion analysis, click here
* The 303,551 jobs created include 138,494 direct jobs, 78,071 indirect jobs, and 86,985 induced jobs.
See the Architecture 2030 BBI Fact Sheet for all assumptions and sources used to generate these figures.