Montgomery County leaders want to tighten requirements for tax incentives by increasing the eligibility threshold for energy-efficiency standards in commercial and multifamily buildings.
A bill to change the requirements also would remove a cap on how much the county could award in tax credits. The limit currently is a total of $5 million a year. The new proposal would keep that cap for existing construction, but remove it for new construction.
Under proposed legislation, existing and new buildings would need to exceed the International Green Building Code to receive the property tax credits.
The county’s current tax credit for energy-efficient buildings allows up to $5 million to be given out annually. The current limit to receive credits is five years for new buildings and three years for existing buildings.
The bill was introduced to the council on Tuesday and will be discussed at a public hearing on March 31.
Council Member Hans Riemer said the existing tax credit is “not the most effective way to fund green buildings.” He is a lead sponsor of the bill with Council Member Andrew Friedson.
The current incentive allows facilities that meet the building code to receive credits. The proposed changes would require them to exceed the code, not just meet it.
“(It) was going towards buildings that probably didn’t necessarily need the funding as an incentive,” Riemer said. “One of the main problems is it’s pretty unpredictable if you could get funding and how long it would take.”
Twenty-six percent of the greenhouse gas emissions in the county come from energy consumption in commercial buildings, according to the county’s most recent greenhouse gas inventory.
Creating stricter requirements will incentivize developers and property owners to make more energy-efficient improvements, Riemer said.
“You only get someone to do something if they know they’ll get the reward,” he said. “We wanted to restructure it so that buildings would do things they wouldn’t otherwise do.”
Existing commercial and multifamily structures would be placed into one two-tiered property tax credit system. New buildings would have their own two-tiered system.
The credits have been based strictly on industry certifications. Under the bill, they also would be based on energy-reduction metrics. The higher the energy reduction level, the higher the credit.
Developers could also receive a bonus credit for up to 100% of the property tax owed on the building based on sustainability certifications. Existing buildings would receive bonus credit depending on their sustainability improvement scores through the Energy Star program.
Limits on credits in the bill would be four years for new construction and two years for existing buildings.
“It was hard work to just adopt the Green Building Code (in 2017) and it’s a stringent framework and we had to smooth out a lot of concerns about it and try to unstick some of the sticking points,” Riemer said.
The main concern was whether facilities certified under the Leadership in Energy and Environmental Design (LEED) Green Building rating system would be eligible under the new legislation. LEED was initially left out of the new bill, but was later added back in, Riemer said.
Shane Pollin, vice president of development for Silver Spring-based developer The Duffie Companies, was involved in a stakeholder group that recommended changes to the green building incentives in June 2019.
The group encouraged the county to include energy reduction metrics instead of solely focusing on industry certifications.
“I think that (the changes) focus on sustainability on a broader and deeper way than what code minimum often does,” he said. “Focusing more on energy savings, indoor air quality, water savings. … If we want buildings to be built better than code minimum, providing incentives makes sense.”
Briana Adhikusuma can be reached at briana.adhikusuma@moco360.media.
