News Column

Energy efficient City to give tax credits for energy-efficient builders

August 7, 2014

By Jen Fifield, The Frederick News-Post, Md.

Aug. 07--Builders in Frederick who think green could see their property taxes cut in half.

The city's elected officials finalized details Wednesday for a new tax credit that will give developers meeting Leadership in Energy and Environmental Design standards, or other equivalent green standards, a break on their annual property taxes.

Mayor Randy McClement and the Board of Aldermen will vote on establishing the credit at a public hearing.

The program would give builders tax breaks on existing and new buildings depending on the LEED certification level each structure achieves, reducing property taxes by 25 percent for all LEED-certified buildings, 50 percent for those receiving silver or gold ratings, and 75 percent for those receiving a platinum rating.

To become LEED certified, builders must use environmentally preferable building materials and install systems that reduce energy use.

Joe Adkins, the city's deputy director of planning, said he is not sure how many LEED buildings are in Frederick, as they are not registered with the city.

The aldermen said they were concerned about the loss of potential property taxes.

Alderman Michael O'Connor said the city shouldn't be as concerned about new buildings, as it hasn't recognized the taxes from those properties yet. The city will feel more of an effect when renovations to existing buildings are completed, he said.

For builders, the reduction in taxes won't be enough to offset the extra cost of designing and constructing a LEED-certified building, but it will help, Adkins said.

Generally, it costs about 5 percent more to achieve LEED certification, and the tax credits will not equal that 5 percent, said Shane Pollin, of The Duffie Cos., which is building the first LEED and Energy Star apartment complex in the city.

The 160-unit apartment complex, East of Market, is under construction on the east side of East Street near 14th Street, and will accept residents as soon as January, Pollin said.

The tax credit won't be much of an incentive for builders to go green, Pollin said.

Developers will have more incentive to build with green standards because the buildings will be more durable and last longer and attract a broader range of residents who appreciate the green features, he said.

Duffie takes pride in what it will offer to Frederick, Pollin said.

The aldermen discussed whether to cap the tax breaks it offers in each fiscal year, and asked staff to look into whether the city caps other tax breaks.

They also discussed whether to provide more of a break to developers building or renovating properties in high-priority areas, but decided against it for now.

Follow Jen Fifield on Twitter: @JenAFifield.


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Source: Frederick News-Post (MD)

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