Owners of commercial buildings could receive local property tax credits if they make buildings that are more energy-efficient and environmentally friendly, under a bill proposed to the Howard County Council recently.
Councilman Christopher J. Merdon introduced legislation that would create a property tax credit of up to 20 percent for three years for properties that are certified through the U.S. Green Buildings Council's Leadership in Energy and Environmental Design (LEED), or so-called green buildings.
This credit would be in addition to the state's incentive that offers builders income tax credits of up to 38 percent.
The county has no environmentally friendly buildings, but Old Town Construction has two planned. Merdon, a Republican who ran unopposed in last week's primary for the 1st District seat, said he introduced the legislation after talking with Jared Spahn, the company's president.
Spahn contributed to Merdon's political campaign, donating $1,400 in the past two years, personally and through one of his companies.
"He was very interested in building two green buildings, [and] he wanted to see if he could have some tax relief," Merdon said. "Obviously there's a public benefit. These buildings save energy, water consumption, landfill, so while there's tax relief for the builder, there's energy efficiency for the public."
According to the Green Buildings Council, commercial buildings account for 36 percent of total energy use and 65 percent of electricity consumption in the United States. They also produce 30 percent of greenhouse-gas emissions and 30 percent of waste at 135 million tons annually, the group said.
Green buildings have energy-saving and environmentally friendly products and building practices incorporated into their design. Some of the products, such as solar panels as a source of energy, are obvious to visitors, but many other devices are not.
Energy-efficient toilets, basement tanks that capture and redistribute rainwater and materials purchased within a 500-mile radius also are part of a plan that help builders meet requirements for certification. The organization has four levels of certification based on the features of the building: basic, silver, gold and platinum.
Merdon said his bill calls for a 14 percent to 20 percent tax break based on the level of certification. Although he wants the bill to provide more of an incentive to developers to build green, he said the level of the tax credit would likely be debated in the council.
"We wanted to come up with a percentage that made it attractive, but at the same time did not put the county in a position of severe reduced revenue," Merdon said. "I suspect the percentages will be discussed at our work sessions, and I'm open to adjusting those percentages to suit the council members' desires."
In Maryland, green buildings are being built more often since Gov. Parris N. Glendening issued an executive order last year that requires all new government buildings and leases more than 7,500 square feet to become LEED- certified at the silver level - an effort to help the state use less energy, generate less waste and reduce use of natural resources. Current projects that fall under that order include buildings at the University of Maryland, College Park, the state Department of Transportation and the Social Security Annex in Baltimore.
The state also passed legislation last year that provides an income tax credit of up to 8 percent of the allowable costs of construction for a LEED-certified building or renovation project, with additional credits up to 30 percent for use of specific building materials.
While the buildings can save in energy costs and help improve the environment, they cost builders 15 percent to 18 percent more to build, according to the Maryland Green Buildings Council. Spahn said his two planned buildings would cost an estimated $9.4 million, but would have cost about $8.1 million if he built them traditionally.
If Merdon's legislation is passed, Howard County would be the first to offer local tax credit for the buildings. Merdon said he would ask the state delegation to introduce legislation that would allow the county to offer more incentives to builders.
"We want to be able to give credits for the design on the buildings, the windows," he said. "The state credits were good incentive but probably not enough."
Spahn says he hopes the two planned buildings would meet the basic LEED certification level. One, a 19,000-square-foot shopping center called Village Crest in Ellicott City, has had its site development plan approved by the county, and construction could begin within a few months, Spahn said. A second, in planning, would be a 101-unit moderate-income, apartment building for active adults age 55 and older in Waverly Woods.
Spahn would like to construct more green buildings, but he says the risk is greater for builders who work with new materials and processes. He says an incentive is particularly important in Howard because the county is running out of land that can be developed, and the property costs are high.
"There's a lot of risk involved in trying to do alternative products and ideas," Spahn said. "As land becomes more and more scarce, and as we make a stronger focus toward urbanization rather than suburbanization, there's a need to create these new buildings, and when we redevelop, its important to format something for our future ... that helps us become less reliant on fossil fuels."