Washington - In order to create jobs, spur construction and protect clean air, U.S. Senator Robert Menendez (D-NJ), a member of the Finance Committee, today introduced legislation to provide tax incentives for the construction of green buildings. The Green Building Tax Credit would offer a refundable 30 percent tax credit for the construction of buildings that are energy-efficient and are location-efficient by being situated in an area conducive to walking and public transportation. The legislation is supported by the non-profit Reconnecting America.
"Part of rebuilding America for the 21st Century is helping people save money on energy and cleaning the air we breathe," said Menendez. "By providing tax incentives for the construction of green buildings, we can create jobs through construction while also increasing energy-efficiency and create healthier communities."
"In communities large and small, urban and rural, Americans are seeking housing options in walkable, transit-served communities where they can own fewer automobiles, drive fewer miles, and reduce their energy use," said John Robert Smith, President and CEO of Reconnecting America "The legislation introduced today by Senator Menendez will help to meet this growing demand by households of all income levels for living a lower-carbon lifestyle. I support the bill's provisions to ensure that low-income households and those who live in smaller towns can also realize the benefits of living in energy-efficient communities near public transportation."
Background on legislation:
Projects meeting the following criteria would qualify:
• Green: projects that are majority residential, must be 25% more energy efficient than the ASHRAE energy code from 2001 (this is similar to a Silver LEED standard); projects that are majority commercial, must be 50% more energy efficient than the 2001 standard.
• Transit-oriented: within ½ mile of public transportation, such as a train station, ferry or bus rapid transit.
• For Rural States, projects would need to be near town centers on previously developed land.
• Mixed-income: at least 5% of any apartments must be affordable to households at or below 60% of the area median income.
• High Density: floor-area-ratio of at least 3.0 net of streets and public spaces.
• Large projects: greater than 150,000 square feet in size.
o For Rural states, projects greater than 50,000 square feet in size would qualify
• Construction start: within 36 months; but to secure a tax credit reservation projects must be ready to proceed.
The GBTC will create jobs now and foster the green construction industry:
• Projects developed under the GBTC program are expected to create approximately 255,000 jobs including 120,000 good paying construction jobs, paying construction workers over $7 billion.
• The tax credit can't be claimed until the projects are completed, so there will be no cost to the Treasury this year.
The proposed GBTC would be structured similarly to the federal Historic Tax Credit program and the Low Income Housing Tax Credit program. The federal Historic Tax Credit program is a 20% tax credit that is earned the year the building is completed and placed in service. The Low Income Housing Tax Credit program typically funds over 50% of development costs and is earned over 10 years starting the year the building is completed and placed in service. The GBTC proposal is comparable to these programs: a 30% tax credit that is earned the year the project is completed and placed in service.
August 11, 2022