Roundtable Weekly - October 12, 2018
EPA Gathers Feedback from Building Owners During “Review Period” for New ENERGY STAR Scoring Models
The Environmental Protection Agency continues the temporary suspension of ENERGY STAR building certifications, after assessing feedback from a number of building owners and stakeholders. Last month, the EPA announced it would commence a “review period” to solicit building owners feedback on recent ENERGY STAR scoring models, in response to the new model announced in August, which would unfairly downgrade some already certified ENERGY STAR buildings. (Roundtable Weekly, September 14)
The EPA continues the temporary suspension of ENERGY STAR building certifications, after assessing feedback from a number of building owners and stakeholders.
- ENERGY STAR is the key federal label that rates and compares U.S. buildings' energy performance. Currently, EPA lists 34,625 buildings and plants, representing more than 5 billion square feet of commercial space across the country, as ENERGY STAR certified. Through initial analyses of Sustainability Policy Advisory Committee (SPAC) membership, The Roundtable learned that the application of the new 2012 data appears to result in materially different outcomes on scores depending upon building size, geography, and source of heating, and these outcomes were inconsistent. RER on behalf of the industry highlighted the issues to the EPA, and the EPA responded with the announced review period.
- “Revisions to ENERGY STAR are much needed and very important,” said Roundtable President and CEO, Jeffrey DeBoer. “However, to be truly effective the data sources and projections relied upon in the revision must be transparent and reflect industry leading practices. (Wall Street Journal, Oct. 9)
- During the review period, EPA and real estate stakeholders have the opportunity to assess variables such as a building's size, location, and fuel mix, to fully consider if these and other factors have had an indiscriminate impact on the new scoring models. “EPA is looking into concerns raised by industry that score changes for some buildings are different than expected,” said an EPA spokeswoman. (Wall Street Journal, Oct. 9)
“We commend EPA in taking this step toward transparent decision making, and are focused intently on assisting during this review period,” said DeBoer. The Roundtable’s Sustainability Policy Advisory Committee will continue working with the EPA during the remainder of the review period.
Roundtable and Business Coalition Seek Administrative Relief, Shorter Cost Recovery Period for Nonresidential Real Estate Improvements
This week The Real Estate Roundtable, along with 239 businesses and trade groups, wrote to Secretary Mnuchinurging the Treasury Department to provide taxpayers with administrative relief from a drafting mistake in last year’s tax overhaul that increased the cost recovery period for qualified improvement property (QIP).
This week, The Real Estate Roundtable, along with 239 businesses and trade groups, wrote to Secretary Mnuchin urging the Treasury Department to provide taxpayers with administrative relief from a drafting mistake in last year’s tax overhaul that increased the cost recovery period for qualified improvement property (QIP).
- The drafting error in the tax law has resulted in a significantly longer 39-year cost recovery period for new, qualified nonresidential interior improvements. The intent of Congress was to allow the immediate expensing of QIP – or provide a 20-year recovery period in the case of taxpayers electing out of new limitations on the deductibility of business interest.
- In the Oct. 9 letter to Secretary Mnuchin, the coalition addressed the need for a QIP correction, along with the unintended consequences if action is not taken. The letter raised concerns that the drafting error is resulting in “[d]elays in store and restaurant remodeling projects,” “[b]usinesses refraining from purchasing or leasing vacant stores or other leasehold spaces that require improvements,” and “[l]oss of construction jobs associated with commercial renovation projects.”
- The coalition letter was sent in response to the Administration’s request for comments on newly proposed regulationsimplementing the additional first year depreciation deduction (immediate expensing) benefit. The coalition submission also included two recent letters—one from 16 Democratic Senators to Treasury Secretary Steven Mnuchin and the other from 58 House Republicans to GOP leadership—reiterating the importance for policymakers to correct this unintentional drafting mistake in last year’s legislation, while recommending that Treasury should issue interim guidance and refrain from enforcing the drafting error. (House Letter, Oct 2 and Senate Letter, Sept 24)
- The Real Estate Roundtable and a broad-based business coalition urged Secretary Mnuchin in August to issue guidance clarifying certain provisions included in tax overhaul legislation enacted last year – including the cost recovery period for qualified improvement property. (Coalition letter, Aug. 22)
Congress could address the issue during the lame duck congressional session between the mid-term election and January. Senate Republican Conference Chairman John Thune (R-SD) said GOP lawmakers are motivated to address a number of tax issues that are outstanding, including tax reform technical corrections and expired tax provisions. (The Hill, Oct. 11)