The economy is in the tank, and, unless we do something about it, it's about to get worse. It turns out the mortgage meltdown we've been suffering through is only the first wave. Wave No. 2 may be more like a tsunami: Between now and 2014, $1.4 trillion in commercial real estate loans are coming due. Most of these loans are for small and medium-sized commercial buildings and businesses that are either "underwater" -- worth less than their mortgages -- or close to it. Without swift intervention, the commercial real estate (CRE) crisis will cripple the still sputtering economy, throwing more people out of work, and precipitating more business bankruptcies and community bank failures.
Yet crisis breeds opportunity. And in this case there could be a double opportunity. It turns out that buildings are responsible for about half of America's emissions of greenhouse gases that are heating our planet. And we're heating, lighting and air-conditioning these buildings like there's no tomorrow. And by "no tomorrow," I mean: no polar icecaps, more droughts, more pestilence, more crop failure, and more climate refugees. We're also throwing good money down the drain.
Here's the crazy truth: With a national effort to boost energy efficiency, we could actually meet the the building sector's greenhouse gas emissions targets set by the Obama Administration for the next few years, put 1.3 million workers -- 600,000 of them construction workers, 20 percent of whom are unemployed -- back to work, and dodge the next wave of mortgage meltdowns. Instead of monkeying around with complicated bills like the cap-and-trade nonsense that didn't make it through Congress, we could make a painless down payment on our emissions reductions goals, while giving some of our beleaguered businesses a tax break and saving money we're now squandering on wasted energy.
Here's how: Architects and researchers from Architecture 2030 have developed something called the "CRE Solution," which would let small business and building owners about to default on their mortgages get a multi-year tax deduction if they retrofit their buildings to make them more energy efficient. The more energy efficient the building becomes, the greater the tax break. Commercial building owners could trade or sell these tax deductions to investors, who would provide the infusion of capital over a three-year time span. The capital would be invested in putting our highly skilled construction workers back on the job, retrofitting these properties. Property values would rise while energy bills decline. With good-paying jobs, construction workers would once again pay taxes, providing a much-needed revenue stream to state and local governments. For the $6 billion in tax breaks the federal government would provide for this purpose, Uncle Sam would receive $10 billion back in net federal tax revenue, while state and local governments netted $5.25 billion.
It's a solution that should warm the hearts of both Democrats and Republicans while cooling our sweltering planet. Saving our small businesses and our local banks from going under while avoiding deficit spending ought to be hard to resist. Restoring the tax base in our shuttered downtowns, putting money back in the coffers of our local schools, and jumpstarting the economy across this country ain't so bad either.
Do we still need fees on carbon emissions? Of course. And once we've achieved these and other similar common sense energy efficiency goals and stopped hemorrhaging energy, money and jobs, we should take up solutions like fee-and-dividend, in which polluters pay a carbon fee and the public gets a green check. But for starters, the CRE solution is where our focus should be.
This op-ed was originally published by "Other Words."