Commercial Roof Depreciation Reform
Job Creation through Depreciation Reform for Commercial Roofs
Unemployment in the construction industry remains at an alarming 13.5 percent, and
any recovery in commercial construction is uncertain for the foreseeable future.
Fortunately, there is a solution that would help
create 40,000 new construction
industry jobs. NRCA strongly supports H.R. 2962, the Roofing Efficiency Jobs Act
of 2011, introduced by Reps. Tom Reed (R-N.Y.) and Bill Pascrell (D-N.J.), and S.
1575, the Energy-Efficient Cool Roof Jobs Act, introduced by Sens. Ben Cardin (D-Md.)
and Mike Crapo (R-Idaho). These bills would remove an obstacle in the tax code that
is hindering job creation, as well as the advancement of energy efficiency within
the commercial building sector.
By accelerating demand for energy-efficient commercial roofs, H.R. 2962 and S. 1575
would:
- Create nearly 40,000 new jobs among roofing contractors and manufacturers
- Add $1 billion of taxable annual revenue in the construction sector
- Reduce U.S. energy consumption by 11.4 trillion British thermal units and save small
businesses and consumers millions of dollars in energy costs
- Reduce carbon emissions by 800,000 metric tons (equal to emissions of 153,000 cars)
H.R. 2962 and S. 1575 would
remove an obstacle in the tax code to job creation and
achieve greater levels of energy efficiency in the commercial building sector, which
accounts for 18 percent of U.S. energy use. Between 1981 and 1993, the depreciation
schedule for nonresidential property was increased from 15 to 39 years; however,
the average life of such a roof is only 17 years. This is an incentive for building
owners to delay the replacement of older, failing roofs with new energy-efficient
technology that reduces energy consumption.
Congress should rectify this problem by providing 20-year depreciation for commercial
roofs that meet a benchmark energy-efficiency standard. Providing "economic" depreciation
consistent with the life of the asset will accelerate demand for such roofs by removing
the disincentive for building owners to perform complete retrofits of failing roofs.
An independent study by Ducker Worldwide, Troy, Mich., a global research firm, estimated
that reforming the 39-year depreciation schedule will create
nearly 40,000 manufacturing
and construction jobs per year. This study also documented the 17-year average life
of a commercial roof.
Because of the unique job creation and energy-efficiency benefits of this much-needed
reform, H.R. 2962 and S. 1575 have the support of numerous business and labor groups.
NRCA urges Congress to quickly move forward with this legislation to help spur economic
growth and job creation in the hard-hit construction industry. For more information,
please contact Duane Musser, NRCA's vice president of government relations, or Brandon
Audap, NRCA's director of federal affairs, at (202) 546-7584.
(October 2011)