Capitol Hill

In the 2002 session of the previous Congress, HR 4, the Securing America's Future Energy Act, was the basis for select members of the U.S. House of Representatives and Senate to write a mutually acceptable energy bill to send to the president for his signature. Final passage proved impossible when time ran out before the 2002 congressional election, but among various areas of agreement was a tax incentive for the construction of energy-efficient commercial buildings.

In the current 108th Congress, the House passed another omnibus energy bill, HR 6, the Energy Policy Act of 2003, on April 11. But for reasons not fully explained, the House dropped the tax incentive for commercial buildings. However, the Senate version, S 14, contains the incentive, which could be a tax stimulus for the roofing industry.

The S 14 commercial buildings tax incentive would provide a tax deduction equal to the "energy-efficient commercial building property" expenditures up to a limit of $2.25 per square foot related to the construction or reconstruction of commercial buildings. To qualify, an energy-efficient commercial building property must reduce energy costs of a building by 50 percent or more according to ASHRAE 90.1-1999, "Energy Standard for Buildings Except Low-Rise Residential Buildings," a commonly used energy code for commercial buildings.

The energy-efficient commercial buildings deduction includes expenditures for a building envelope. According to the U.S. Department of Energy, a building envelope includes everything that separates the interior of a building from the outdoor environment, including the windows, walls, foundation, basement slab ceiling, roof system and insulation.

NRCA's Washington, D.C., office and the Polyisocyanurate Insulation Manufacturers Association are working to keep the energy-efficient commercial buildings deduction in the energy bill if and when it is agreed upon by the House and Senate. It is important to note, however, the overall size of the energy tax incentives packages in both chambers' energy bills are much smaller than the package in the previous Congress because of federal budget considerations. Fortunately, there is bipartisan support for the commercial buildings deduction, as well as support from environmental advocacy groups.

R2T2 initiative

NRCA's Washington office has put together a lobbying campaign, the Realistic Roofing Tax Treatment (R2T2) Initiative, to shorten the depreciation schedule in the Internal Revenue Code from 39 years to one that reflects the depreciation class life of commercial roof systems. To develop research about actual class life, the National Roofing Foundation's Roofing Industry Alliance for Progress has funded a study by Bloomfield Hills, Mich.-based Ducker Research Co. Inc. to determine a new roof system's life expectancy. The study will be finished this month.

The ultimate goal of the R2T2 Initiative is a separate accelerated depreciation schedule for roof systems. The system of separate component depreciation for buildings essentially was done away with by the Economic Recovery Tax Act of 1981, replaced by a 15-year depreciation schedule for buildings and ultimately pushed to 39 years in subsequent tax bills (see "Depreciation limit," July issue, page 22).

Adoption of a new class life for commercial roof systems, perhaps in the 15- to 20-year range, would satisfy two important public policy goals—stimulating the economy and enhancing energy efficiency—that would best benefit NRCA members.

With a separate accelerated depreciation schedule for roof systems, building owners no longer would delay replacing failing roof systems, opting instead to purchase newer and presumably more efficient systems.

And given the current federal budget deficits, it is likely that if Congress approves a new depreciation schedule for roof systems, the schedule will require building owners to install replacement roof systems that are rated as being more energy-efficient by recognized authoritative bodies to qualify.

Legislative meeting

These and other issues will be the focus of NRCA's Fall Committee Meetings and Legislative Conference held Sept. 30-Oct. 3 in Washington. NRCA's R2T2 Initiative already has been the topic of discussion among NRCA members and influential leaders on Capitol Hill, such as Sen. Charles Grassley (R-Iowa), who is chairman of the Senate Finance Committee, and more lobbying will take place by NRCA members during the conference.

A featured event during the conference will be NRCA ROOFPAC's Show Me the Stars Gala Dinner, which will honor Sen. Christopher S. "Kit" Bond (R-Mo.); Sen. James Talent (R-Mo.); and Rep. Roy Blunt (R-Mo.), who is the House Majority Whip. These leaders have advocated NRCA's agenda in Congress during recent years.

Craig S. Brightup is NRCA's vice president of government relations.