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The Angle

February 17, 2011
Budget debates take center stage in Washington; AIA member architects asked about stalled projects; new housing reform proposal; local officials discuss IGCC; and more…
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Contact | Federal Relations | State Relations | Local Relations |Codes Advocacy | Communities by Design | Advocacy365

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In this issue:

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Washington Report

President's Budget Plan Sets Up Protracted Battle over Spending, Deficits

Plan Offers Increases in Green Building, Infrastructure Spending

   

As polls show increased public concern over the federal government's spiraling debt, the Obama administration and Congress find themselves simultaneously engaged in debates over the annual budgets for the current fiscal year as well as next year.

Last year, Congress failed to pass a budget for FY2011, which started last October, and is only operating on an extension of funding levels from 2010. However, that extension will expire on March 4. A budget proposal being advanced by Republicans in Congress would finalize the current fiscal year's budget and seeks to make cuts totaling over $100 billion. These cuts target a wide range of federal programs, including energy efficiency programs at the Department of Energy, HUD's Livable Communities programs, EPA brownfields programs, clean water funds, the Energy Star program, community development funds, and other programs that effect the built environment.

In its current form, the Republican-led proposal stands almost no chance of passage by the Senate and a near-certain veto from the White House. This means that on March 4 the government will shut down as it did in the 1990s unless Congress and the President can agree on a budget plan or pass another temporary extension.

Meanwhile, the Obama administration this week has released its budgetary priorities for the next fiscal year, which starts in October. The administration's budget is a leading indicator of the President's spending priorities and vision for the future, although it is certain to be changed by Congress.

A few key elements from the President's budget request:

  • The Budget includes more than $1 trillion in deficit reduction, two-thirds of it from cuts. According to the White House, the budget puts the nation on a path toward fiscal sustainability so that by the middle of the decade, debt will no longer be increasing as a share of the economy. Congressional Republicans, however, blasted the budget saying that it does not go nearly far enough to rein in spending.
  • A five-year spending freeze on non-defense programs will reduce the deficit by over $400 billion over the next decade and bring this spending to the lowest level since the Eisenhower administration.
  • A 10-year deficit reduction plan to save $1.1 trillion, excluding war savings, achieved by not extending the 2001 and 2003 tax cuts for high-income earners and making spending cuts.
  • Funding to support the goals of putting one million electric vehicles on the road by 2015; doubling the share of electricity from clean energy sources by 2035; and reducing buildings' energy use by 20 percent by 2020. It pays for these increases through a proposed elimination of 12 tax breaks to oil, gas, and coal companies, which would raise $46 billion over 10 years.
  • Establishment of 20 economic growth zones that will receive expanded tax incentives to spur investment and employment.
  • Funding to prepare 100,000 new science, technology, engineering, and math teachers.
  • As part of a $556 billion comprehensive surface transportation bill, the budget provides a $50 billion up-front investment; establishes a National Infrastructure Bank to support projects of national importance; and brings access to high-speed rail to 80 percent of Americans within 25 years.
  • Funding to spur the construction of a next-generation, wireless broadband network to bring high-speed Internet access to 98 percent of Americans, and establish an interoperable network for public safety.
  • The budget suggests more than 200 program terminations, reductions, and savings, totaling more than $33 billion in savings for 2012. Half of all agencies see their top line reduced from 2010 enacted levels. Some of the cuts include: reducing the Community Development Block Grants by $300 million; home heating assistance (LIHEAP) by 50 percent, or $2.5 billion; the Great Lakes Restoration Initiative by one-quarter, or $125 million; grants to large airports by more than $1 billion; and $950 million from states revolving funds for water treatment plants and other infrastructure.
  • A three-year patch to prevent an increase in taxes on middle-class families through the Alternative Minimum Tax (AMT) by limiting the rate at which high-income earners can itemize tax deductions. This would bring the rate back to where it was during the Reagan administration.
  • A process to quickly dispose of excess and under-utilized federal real estate.

One area that the budget does not address is the rapid growth in entitlement programs like Medicare, Medicaid and Social Security, which account for the lion's share of federal spending. President Obama said in a news conference Tuesday that an agreement to do that will require "a spirit of cooperation between Democrats and Republicans." Some observers criticized the President, however, for not taking the first step in addressing these long-term budget challenges.

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White House Adds Details to Green Buildings Plan
   

The release of President Obama's FY2012 budget brought new details regarding the "Better Buildings Initiative" he launched last week. The proposal, which sets a goal of making commercial buildings 20 percent more energy efficient by the year 2020, puts forward a series of initiatives aimed to encourage businesses to embrace efficiency:

Energy Efficient Commercial Building Tax Deduction

Current law provides a $1.80 per square foot deduction to make commercial buildings 50 percent more energy efficient. The President's proposal calls to make this deduction a credit, which the White House says will expand the market with an estimated $1 billion in incentives in fiscal year 2010.

The administration's proposal would maintain the provision in the current law that allows architects to claim the incentive if the building is owned by a public agency. The Department of Energy is also working to make the deduction easier to use. It has created a new technical support e-mail address for questions. DOE is also working the IRS to decrease the onerous filing requirements and use a more prescriptive approach for the projects eligible for partial deductions. Further guidance will be released in the Spring.

Race to Green

In an attempt to capitalize on the success of the Department of Education's "Race to the Top" program, the Obama administration is moving towards more competitive grant programs. Within the Department of Energy, this plan would create a public-private partnership to provide a $100 million grant competition, called "Race to Green," for state and local governments using innovative approaches to simplify their building codes, performance standards and regulations, encouraging private investment and creating a more conducive environment for energy efficient retrofits. It will also establish a $2 billion pilot program to guarantee loans for hospital and school retrofits.

Better Buildings Challenge

Led by former President Clinton and Jeff Immelt, CEO of General Electric and the new head of the Council on Jobs and Competitiveness, this program will challenge CEOs and university presidents to become leaders in energy efficiency and will offer to them a network of colleagues seeking to share knowledge, best-practices and experiences. In addition, they will receive technical assistance and public recognition.

Workforce Training

The President hopes to increase training opportunities for those workers involved in commercial building technologies, including energy auditing and building operations. He would also like to create a Building Construction Technology Extension Partnership, modeled after the Department of Commerce's Manufacturing Extension Partnership, which offers training, tools and connections to that industry.

According to the White House, "Improving energy efficiency in our buildings can create jobs, save money, reduce our dependence on oil, and make our air cleaner."

While there is support in Congress for energy efficiency, the president's plan to pay for the program with rescinding tax breaks for the oil and gas industry will make it a tough slog.

The AIA is working with the White House and Congressional lawmakers to refine parts of the plan and sped its introduction on Capitol Hill. AIA 2011 President Clark Manus, FAIA, said that the plan "represents a major step forward in implementing policies for which the AIA has been advocating for some time."

 

    For more information, contact Billie Kaumaya, manager, Federal Regulatory Relations.

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CALLING ALL STALLED PROJECTS

Do you or your firm have projects that have stalled due to a lack of financing? Do you know of projects that have benefitted from federal programs like the energy efficient commercial building tax deduction or SBA loans, or projects that may go forward if those incentives are expanded? We want to hear from you. Click here to help us tell the public how stalled projects are holding the economy back -- and how we can all work to rebuild and renew America.

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Budget Proposal Includes Large Infrastructure Investment, Support for Livability

But Congress Looking to Cut Livable Community Programs

   

The Obama administration's FY2012 budget proposal opened the debate on infrastructure spending with a bang, calling for Congress to pass a new transportation bill that would authorize $556 billion over six years and make livability a top priority.

Passage of a surface transportation bill was one of the primary asks at the recent AIA Grassroots Legislative and Leadership Conference. The President's support for a transportation bill underscores to key arguments the AIA has made. First, it recognizes the tremendous potential for infrastructure spending to create jobs. Second, the proposal emphasizes the effect that transportation projects have on economic development, public health, and visual identity within a community.

Currently, transportation and infrastructure spending is governed by the transportation authorization bill that was passed in 2005 and was scheduled to last just four years. For the last 18 months, the old bill has been extended repeatedly as major reform has been delayed. Although the budget contains more aspirations than details, the Administration is signaling its commitment to getting a bill done this year. A few of the highlights from the proposal include:

  • the creation of a National Infrastructure Bank to invest in projects of regional or national significance;
  • inclusion of intercity passenger rail funding for the first time ever;
  • a combined $4.1 billion in 2012 (and $28 billion over six years) for programs that help communities become more livable and sustainable; and
  • consolidation of 55 different transportation programs into five funding areas.

One item the President's budget does not address is how to pay for the additional spending. Currently the federal gas tax which feeds the transportation trust funds would provide only about half of the funding envisioned in the bill.

Rep. John Mica (R-FL), chairman of the House Committee on Transportation and Infrastructure, is holding a series of field hearings on many of these issues. Remaining stops on his tour include Chicago; Vancouver, Washington; Los Angeles; Oklahoma City; and Memphis.

The President's budget proposal also highlights his administration's continued support for livability programs within the Department of Housing and Urban Development and other agencies. The proposed budget provides more than $500 million to foster regional and community planning efforts that integrate transportation, housing and land use.

However, Congressional republicans are looking in the opposite direction, proposing to eliminate all funding for the HUD livability program in their budget plan for the remainder of the fiscal year. The AIA is working with its colleagues to educate federal agencies and Congressional lawmakers about the importance of planning and design in the transportation and community development process.

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    For more information, contact Cooper Martin, manager, Federal Research and Policy Development.

Administration Offers Outline for Housing Reform

Sees End to Fannie, Freddie

   

Last Friday, the Obama administration released a report to Congress that outlined its ideas for the reform of the mortgage giants Fannie Mae and Freddie Mac. This report was mandated in the 2010 Dodd-Frank Wall Street reform legislation.

The issue is highly politicized and expectations that the administration would release specific details had been relatively low. Instead, the paper that was given to Congress identified "fundamental flaws" in the mortgage market and outlined a future role for government that will be greatly reduced and much more targeted.

All three of the options that were described involve the elimination of Freddie and Fannie. The proposal also suggested that the Federal Housing Authority (FHA) would be reduced to its more traditional role as a provider of mortgages for low- and moderate- income Americans and first-time homebuyers. The Treasury Department estimated that this would reduce FHA's market share from 30 to 15 percent.

Just as important as the details of the proposal was the timeline for implementation outlined by Treasury Secretary Timothy Geithner. In the news release that accompanied the report, Geithner stated, "We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market."

The AIA is watching the issue closely to ensure that issues important to the design profession are addressed.

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    For more information, contact Cooper Martin, manager, Federal Research and Policy Development.

GSA Launches Online Resource to Aid in Sustainability Decision-Making
   

Recently, the General Services Administration announced the launch of their online Sustainable Facilities Tool, courtesy of the Office of Federal High Performance Green Buildings. This is a one-stop resource to support decision-making regarding sustainable building principles, materials, and systems. Targeted to help project personnel identify and prioritize cost-effective, sustainable strategies for small projects that do not normally engage workplace consultants or designers, the Tool helps users understand and select environmentally-preferable solutions for renovations, alterations, and leases.

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County Leaders Explore Benefits of Green Code
   

While AIA leaders buzzed about Washington, DC during the recent Grassroots Leadership and Legislative Conference, over 125 county leaders went online February 3 to take part in "Building Sustainable Communities with Green Building Codes," a webinar facilitated by the National Association of Counties (NACo).

According to a poll taken during the webinar, 25 percent of those participating indicated that they had no previous exposure to the International Green Construction Code. Dennis A. Andrejko, FAIA, AIA National's Vice President of Knowledge and long an active participant in the drafting and development of the IGCC, spoke to the details of the IGCC, including:

  • jurisdictional electives in complying with the code;
  • what the code covers (e.g., water and energy use, site selection, commissioning, etc.);
  • the code development process;
  • why the AIA is involved; and
  • why it is important to implement a well-vetted green code to establish a sustainable "floor" for commercial building.

Becky Baker, building director for Jefferson County, Colorado, and a member of the IGCC public comment hearing committee this past summer, spoke largely to the advantages and opportunities afforded local building officials by the advent of the IGCC. Baker noted that as most jurisdictions are already familiar with the codes promulgated by the International Code Council -- better known as the "I-Codes" -- adopting the IGCC would a natural fit as it overlays (i.e., coordinates and integrates) with existing I-Codes and no separate green permits would be required. Furthermore, given the consensus process by which the IGCC is being developed, Baker explained how adopting the IGCC is a much more economically feasible proposition for jurisdictions than crafting and implementing a "home grown" "green" ordinance or statute.

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The Angle Archive:

The Angle is published by the AIA Government and Community Relations Department, 1735 New York Ave., NW, Washington, DC, 20006. To contact The Angle, send an email to govaffs@aia.org.

 

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