Policy Issues
Energy, Environment, Infrastructure & Other Policies

Ensuring Sensible Policies in the Areas of Energy, Environmentm Infrastructure, & Land Use Policies 
  
  

Policy Issues SnapshotJuly 2017
M
ore background on various Energy, Environment, Land Use and Infrastructure policy issues can be found in recent issues of Roundtable Weekly — our weekly policy eNewsletter that can searched by key word or phrase.  The Roundtable's 2017 National Policy Agenda, Real Estate: A Foundation for Growth, includes sections on Energy Efficiency and Infrastructure.

RW_cover_2012

News on various sustainability issues can be found in recent issues of Roundtable Weekly — our weekly policy eNewsletter archive that can searched by key word or phrase.

  ENERGY STAR Program

  New EPA Labels for High-Performance Tenant Spaces

  Federal Energy Data Gathering:  Commercial Building Energy Consumption Survey (CBECS)

  Infrastructure, Public-Private Partnerships (P3s)

  179D Tax Incentive for Energy Efficient Buildings

  Federal Environmental Regulations – Climate, Waters of the U.S., Lead-Paint  

 Land Use Near Airports – FAA “One Engine Inoperative” Policy  

✓ ENERGY STAR Program     

The Roundtable, other national real estate organizations strongly support ENERGY STAR: voluntary P3 program imposing no federal regulations on industry.  

Established in 1990s, it is a proven program for building owners/managers to label assets as top energy efficiency performers as a signal in the marketplace to CRE investors, tenants.    44 billion sq. ft. of U.S. commercial floor space – 50% of the market – use ENERGY STAR’s free, online tool to measure, manage energy, water use in buildings and across portfolios. 

The “business case” for ENERGY STAR: Creates jobs, enhances competitiveness, improves energy independence, and saves money for American families and businesses on utility bills and mortgage payments.  ENERGY STAR funding was preserved in federal “stopgap” budget for remainder of FY’17 (through Sept. 30, passed by Congress in late April.)

 2015-09-30 Tenant Star letter IMAGE x150 

The Roundtable submitted comments to help advance the Administration’s process for implementing new “Tenant Star” legislation.

President Trump’s budget “blueprint” for FY’18 proposes to de-fund ENERGY STAR starting October 1.  Republicans, Democrats alike expressed initial resistance against Trump’s budget stating it would not pass Congress in current form.  Annual White House budgets historically only serve as guidance for Congress, which controls purse strings and must ultimately enact bills and measures for federal spending.

With the FY’18 appropriations process underway, Roundtable and other industry partners are making the “business case” to Congressional Appropriations Committees to fund ENERGY STAR next year.

Congress must pass any new budget or broad resolution (including EPA spending) by Oct. 1 to avoid federal shutdown.

✓ New EPA Labels for High-Performance Tenant Spaces 

Uncertain ENERGY STAR budget affects EPA’s ability to implement emerging tenant spaces labeling program – an RER Sustainability Committee priority.  

Congress passed so-called “Tenant Star” law in 2015 by overwhelming, bipartisan margins.  De-funding ENERGY STAR would likely mean de-funding EPA’s nascent tenant program to label high performance design and construction “(D&C”) for tenant fit-outs.

Despite budget uncertainty, EPA presses forward to release first (”D&C”) criteria to voluntarily “label” high-performance leased commercial tenant spaces. 

EPA is currently seeking “Charter Tenants” to pilot and test v. 1.0 criteria of  ENERGY STAR’s new tenant spaces criteria.  Current deadline of “Charter Tenant” applications to EPA: July 15, 2015.  EPA expected to announce selection of Charter Tenants in inaugural program after Labor Day.  

✓ Federal Energy Data Gathering:  Commercial Building Energy Consumption Survey (CBECS)

Throughout 2017: U.S. Energy Department’s data gathering branch expected to lay groundwork for first-ever national survey on commercial tenant energy use (along with whole-building “CBECS” survey).  

In 2018, such surveys requesting data from building owners/managers for both whole-building, tenant energy use are expected to be released to CRE markets.  Also in 2018, current building ENERGY STAR scores could change when EPA incorporates most recent completed CBECS data set (from 2012) to update asset labels.

2017 PolAg cover x200

The Roundtable's 2017 National Policy Agenda, Real Estate: A Foundation for Growth, includes sections on Energy Efficiency and Infrastructure.

✓ Infrastructure, Public-Private Partnerships (P3s) 

In the second half 2017, the Trump Administration and Congress plan to consider a comprehensive infrastructure bill.  Senate Minority Leader Charles Schumer (D-NY) has stated that Infrastructure could be an area of bipartisan compromise. 

President Trump has stated that $1 trillion is needed for infrastructure plan.  The White House proposed budget for FY20181, starting Oct. 1, includes $200 billion in taxpayer
spending to leverage private sector capital for $1 trillion total infrastructure investment package. 

Public-Private Partnerships (P3s) are co-investments expected as key “pay for” in Trump’s plan.  Gas tax receipts seeding Highway Trust Fund nowhere near close enough to cover long-term road and transit needs. GOP deficit hawks will balk at excessive increases to taxpayer spending for infrastructure.

During Transportation Secretary Elaine Chao's Jan. 11 Senate confirmation hearing, she state that  “All ideas” on table to tap into trillions of private capital potentially available for infrastructure. 

Roundtable’s infrastructure policy points: 

  • Federal financing must leverage far greater amounts of private sector capital.
  • Optimize policies to attract foreign investments to pay for U.S. infrastructure.
  • “Fix it First”: Designate funding sources to prioritize necessary repair other funds for new construction.
  • Ensure mass transit gets fair, proportionate share of available dollars.
  • Define eligible infrastructure beyond “transportation.”  Must also include water, power, telecom, public housing/buildings.
  • Streamline government permit process.

March 2 and May 16: The Roundtable sends letters to Senate Transportation, Public Works Committees (respectively) on potential infrastructure bill, setting forth principles above.

June 9, Roundtable Weekly — "Roundtable's DeBoer Offers CRE’s View on the Nation’s Evolving Infrastructure Needs"

June 23, Roundtable Weekly — "Foreign Investment Could be Key to Trump’s Infrastructure Plan"

✓ 179D Tax Incentive for Energy Efficient Buildings

On December 31, 2016 the 179D tax incentive for energy efficient buildings expired.  Currently, there is no available federal tax incentive specifically for energy efficient commercial buildings.  If Congress considers changes to energy tax provisions of Internal Revenue Code in coming months, efficiency incentives should also be assessed (along with energy creation credits for oil, gas, wind, solar, etc.).

  • If 179D re-emerges, The Roundtable is supportive of these key elements:
  • Greater focus to incentivize existing building retrofits (vs. inherently more efficient new construction).
  • Enable REITs, partnerships, other similar CRE holding structures to capture incentive.
  • Benefits for high-performance tenant space build-outs.

Even if 179D does not re-emerge, various Republican tax proposals – offered as part of comprehensive tax code reform and favoring immediate expensing (as opposed to current depreciation rules for 39-year CRE write-offs) – could incentivize certain energy efficiency investments in commercial new construction and equipment retrofits.

✓ Federal Environmental Regs: Climate Change, “Waters of the US,” Lead Paint

President Trump in a Feb. 28 Executive Order directed EPA to re-do "Waters of the U.S.” (WOTUS) rule.  A narrower scope of federally regulated waters is expected to be proposed by new Administration, as aligned with opinions of late Justice Scalia. President Trump’s budget “blueprint” also proposes to discontinue funding for Clean Power Plan (climate rules) and slashes EPA’s budget generally.

New EPA focus more on controls to regulate traditional pollutants and toxic releases, to avoid Flint, Michigan-type catastrophes.  The Administration's March 16 budget “blueprint” confirms EPA funding priority as protecting critical drinking and wastewater infrastructure.

On May 15, 2017 The Roundtable and real estate groups submit comment letter to EPA asking for regulatory relief to:

  • Clarify that municipal storms drains and ditches are not “waters of U.S,”  as these “point sources” are already regulated under the federal clean water rules; and
  • Halt efforts to regulate tenant fit-outs and other commonplace building renovations, because EPA has never shown such activities cause lead paint hazards.

✓ Land Use Near Airports – FAA “One Engine Inoperative” Policy

On Sept. 30, 2017 the budget for the Federal Aviation Administration expires.  Congress is looking to re-authorize the agency but privatizing air traffic control is key proposal of House Republicans.

Of significance to commercial real estate is that FAA reauthorization  could tee-up re-consideration of longstanding One Engine Inoperative (“OEI”) proposed policy change, which lingers from the Obama Administration.  The OEI proposal could affect height of buildings near airports.  OEI would compel FAA to consider possibility of a plane engine failing on takeoff when  determining if a building, structure poses hazard to navigable airspace.   k

One CRE report notes that almost 4,000 buildings, at 380 airports across U.S., could be “non-conforming” of OEI policy changes were to take effect.   The FAA has admitted:  OEI policy “about-face” not about public safety issues.  But, OEI changes could have serious implications on the allowable heights of  buildings, transferrable air rights, land development near airports across the nation – and the ability to obtain lending and insurance coverage.

The Roundtable has long advocated that any OEI change must go through a full public rulemaking process – something that cannot be achieved by a “stroke of FAA’s pen.”  Also, the White House Office of Management and Budget must review a full cost-benefit analysis of any OEI policy change.

June 23, Roundtable Weekly — "FAA Reauthorization Bill in House Includes Roundtable-Backed “One Engine Inoperative” Language"

The Roundtable and coalition partners are prepared to re-engage on OEI process requirements for rulemaking, cost-benefit analysis in context of FAA reauthorization on Capitol Hill.

---------------------------------------------------------------------------------------------------------------

For weekly updates on key policy issues affecting commercial real estate, see our eNewsletter  Roundtable Weekly

The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is led by Chairman Tony Malkin (Empire State Realty Trust) and Joyce Mihalik (Forest City Realty Trust) serving as Vice Chair.  For additional information on sustainability, infrastructure, immigration, and land use issues, please contact Duane Desiderio, Senior Vice President and Counsel at The Real Estate Roundtable or call (202) 639-8400.

 imgAdFoundation           imgAdRealEstate  

© Copyright 2017. All Rights Reserved.
The Real Estate Roundtable, Market Square West, 801 Pennsylvania Ave, NW Suite 720, Washington, DC 20004
Tel: 202.639.8400      Fax: 202.639.8442     info@rer.org | Privacy Policy