The federal government is opening the money spigots with billions of dollars in environmental and energy stimulus.

The goal of this article is, modestly, to assist you by providing a guide to follow the money and in finding opportunities in the resultant Green building revolution. A guide is likely necessary because H.R.1, The American Recovery And Reinvestment Act of 2009, as signed by President Barack Obama on February 17, 2009, is over 1,100 pages long. It is unlikely any member of Congress actually read the bill before the conference report with the final handwritten provisions, was made public on February 13th, and approved by the House of Representatives and Senate on that same day.

To comprehend how huge this Stimulus Act is for Green building, it is necessary to appreciate it in context.

Late in 2008, Congress passed the Emergency Economic Stabilization Act, which revised the $700 billion financial rescue package and added $150 billion of tax breaks and incentives. Significantly, included among the tax provisions were $18 billion of tax credits for environmental innovation and conservation and energy efficiency systems, including everything from extending the all important energy efficient commercial building deduction to creating a new tax credit for electricity created by waves, tides or ocean currents. Hit hard by recession, with projects stalled for lack of funding, the vast majority of the $18 billion in tax credits have gone unclaimed.

The new Stimulus Package provides for direct spending; loan and bond programs; and tax credits, including significantly allowing developers to apply for grants from the Treasury Department in lieu of utilizing the Investment Tax Credit, and the like.

However, more federal government stimulus is expected and will be required to fully advantage Green building. As presented, but not yet enacted, President Obama’s 2010 budget includes a host of environmental and energy stimuli, the centerpiece of which is a cap on U.S. carbon emissions, requiring business to bid for permits allowing then to emit greenhouse gases (earning the government $650 billion in ten years according to the budget estimate).

Green building will not only benefit from that federal legislation to curb greenhouse gas emissions (recall buildings in the U.S. contribute 38.1% of the nation’s total carbon dioxide emissions), later this year, but will get a long term boost when a new global climate change treaty (post Kyoto Protocol) is signed in Copenhagen in December.

While the Obama Administration is pouring billions of federal dollars into environmental and energy initiatives, to spur economic growth, free the nation from foreign oil, and arrest global warming, many believe more will need to be done to ignite new construction of Green buildings in this period of economic recession.

Recognizing that some $94.1 billion, or over one-tenth of the $787 billion Stimulus Plan, is devoted to Green and clean energy, the compilation of specific programs is an attempt at assisting businesses in positioning themselves to find opportunities in the huge dollars at stake. Equally important are strategies to protect businesses in a world where the environmental policies are still in flux and the economy is in turmoil.

The Center for American Progress estimates that $9,516,780,462 of the Stimulus money will flow to Maryland!

Direct spending includes a goal to authorize 50 percent for shovel ready projects initiated by June 17, 2009. And that date might appear unprecedented in government procurement, but it is a snail’s pace when compared to the April 3, 2009 deadline for the General Services Administration to “submit its official project list” for federal buildings.

Select direct spending under the Act ..

Federal Buildings. The Stimulus Plan provides $5.55 billion to the General Services Administration for federal buildings, including $4.5 billion for measures to make GSA facilities “high-performance green buildings,” as defined by the 2007 Energy Act. The law also requires that $4 million of funds provided be directed for GSA’s Office of Federal High-Performance Green Buildings, which was created by the 2007 Energy Act.

Department of Defense. The Act also provides over $1.45 billion for Department of Defense construction, and $2.1 billion for operations and maintenance, not including over $2 billion for the Army Corps of Engineers and over $1 billion for the Department of Veterans Affairs.

Green Schools. The Plan includes a $53.6 billion State Fiscal Stabilization Fund, to be administered by the federal Department of Education that will provide, among other things, funds to governors for use in restoring and providing state funding to school districts. Roughly $9 billion of this fund will be available for use by governors to address public safety and other government services, which may include school modernization, renovation, and repair consistent with a recognized green building rating system.

The Act establishes a new form of tax credit bond that may be issued by states and local governments “for the construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed.” And the Act increases the Qualified Zone Academy Bonds to be issued in 2009 and 2010 by $1.4 billion.

Home Weatherization. The Plan provides $5 billion for the federal Weatherization Assistance Program, which provides assistance to low-income families in weatherizing and improving the energy efficiency of their homes. To broaden the program’s reach, the Plan increases the income levels covered by the program (from 150% of the federal poverty level to 200%) and the amount of assistance available for each housing unit (from $2,500 to $6,500). The Plan also increases the percentage of funding that may be used for training and technical assistance (from 10% to up to 20%).

Energy Efficiency in States and Localities. The Stimulus Plan expands by $3.2 billion for the Energy Efficiency and Conservation Block Grant program, which was established by the 2007 energy law to provide support to states, localities, and tribal governments for energy efficiency and conservation programs and projects. $2.8 billion will be distributed by formula and $400 million will be administered through competitive grants.

Public Housing. The Act provides $4 billion for the Public Housing Capital Fund, which provides funds to public housing agencies nationwide for the development, funding, and modernization of public housing developments. Under the Act, $3 billion of the funds will be distributed by formula, and $1 billion will be made available as competitive grants “for priority investments, including investments that leverage private sector funding or financing for renovations and energy conservation retrofit investments.”

Retrofitting Assisted Housing. The Plan provides $2.25 billion for federally-assisted housing, of which $2 billion is for payments to owners of certain project-based rental housing, and $250 million is for funding of Green and energy retrofitting investments in assisted housing.

Green Jobs. The Stimulus Plan provides $3.95 billion for training and employment services under the Workforce Investment Act, including $500 million “for research, labor exchange and job training projects to prepare workers for careers in energy efficiency and renewable energy industries.”

Additionally, the new law provides $250 million for building, rehabilitating, and acquiring Job Corps Centers, of which up to 15% ($37.5 million) may be directed “to meet the operational needs of such centers, which may include training for careers in the energy efficiency, renewable energy, and environmental protection industries.”

Select tax Incentives under the Act ..

Energy Efficient Existing Homes. Existing federal law provides an individual tax credit of 10% of expenses for certain energy-efficient improvements to existing homes. Previously, the tax credit offered specific, capped amounts for qualified property. Under the Stimulus Plan, the amount of the credit has been raised to 30% for 2009 and 2010, and these technology-specific caps have been lifted and replaced with a $1,500 total cap on installations that may qualify for credit. Efficiency levels have also been updated.

Renewable Energy Production Tax Credit. The Act extends the production tax credit for wind facilities by three years to 2013, and for solar, biomass, geothermal, landfill gas, trash combustion, hydropower, and marine and hydrokinetic to 2014.

Temporary Election of Investment Tax Credit.Recognizing the uncertainty of investor tax liability owing to the economic downturn, the new law temporarily permits eligible taxpayers to elect the investment tax credit instead of the tax credit for production of renewable energy for facilities placed in service after December 31, 2008.

The Stimulus Plan also modifies the existing investment tax credit to eliminate the dollar caps for solar, geothermal, and small wind property.

Treasury Grants for Energy Investment. Acknowledging the decreased effectiveness of energy tax credits due to the economic downturn, significantly the law permits taxpayers to apply for grants from the Treasury Department equal to 30% of the cost of projects, in lieu of certain renewable energy investment tax credits.

Advanced Energy Investment Tax Credit. The law creates a new 30% tax credit-to be awarded through a competitive process for investment in facilities that manufacture “advanced energy property,” for example, technologies for producing renewable energy, conserving energy, transmitting renewable energy, and reducing greenhouse gas emissions, among other purposes.

The Stimulus Plan also provides increased authorizations for clean renewable energy bonds, increased by $1.6 billion, and qualified energy conservation bonds, from $800 million to $3.2 billion.

This brief article cannot adequately detail the more than 1,100 page Stimulus Plan. Much more information is available at these very good web sites:

The U.S. Conference of Mayor’s shovel ready projects at
http://www.stimuluswatch.org/

The State of Maryland’s Recovery & Investment web site at
http://statestat.maryland.gov/recovery.asp

The full text of the tax provisions in the stimulus plan can be found at
http://thomas.loc.gov/home/h1/Recovery_Bill_Div_B.pdf

The full text of the appropriation provisions in the stimulus plan can be found at http://thomas.loc.gov/home/h1/Recovery_Bill_Div_A.pdf

In addition to the sources above, some of the information in this article was obtained from the U.S. Green Building Council at http://www.usgbc.org/.

Savvy businesses can find opportunities in these difficult economic times. If we can be of assistance to you in positioning your business to take advantage of the huge Green dollars at stake, do not hesitate to contact Stuart Kaplow at skaplow@stuartkaplow.com.