Greening incentives for new construction and renovations in Charlottesville

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Go green and save green – or something like that could be the marketing tag line for an expansion of the City of Charlottesville’s current green trending. In response to this question –
“What, in your opinion, is the best way for local governments in Virginia to promote the construction (or renovation) of energy-efficient homes and businesses?  The General Assembly passed an ordinance this year which allows localities to set a reduced property tax rate for buildings that are 30% more energy-efficient than the norm.  Our Sustainability Committee is recommending to City Council that Charlottesville offer a one-time 50% property tax cut for buildings that meet this goal.

One thought is that this might encourage builders to “go green” knowing that they can tell potential buyers that their first-year property tax bill will be cut in half.  Two questions:  (1) would this really be much of an inducement to builders or buyers and (2) more importantly, would this just be giving property tax relief to builders or property owners who were likely going to make these kinds of improvements anyway (and have the financial wherewithal to do so)?”

Here’s the relevant Code:

Energy-efficient buildings, not including the real estate or land on which they are located, are hereby declared to be a separate class of property and shall constitute a classification for local taxation separate from other classifications of real property. The governing body of any county, city, or town may, by ordinance, levy a tax on the value of such buildings at a different rate from that of tax levied on other real property. The rate of tax imposed by any county, city, or town on such buildings shall not exceed that applicable to the general class of real property.

For purposes of this section, an energy-efficient building is any building that exceeds the energy efficiency standards prescribed in the Virginia Uniform Statewide Building Code by 30 percent. Energy-efficient building certification shall be determined by any qualified licensed engineer or contractor who is not related to the taxpayer and who shall certify to the taxpayer that he or she has qualifications to provide the certification.

Defining green is the first step. Finding the right people to do the necessary energy audits would be another step (and perhaps one of the weak links in the process).

There is a hard limit on the premium consumers are willing and able to pay to choose environmentally friendly options. Double is clearly too much.

In this market, any incentive that encourages buyers to buy would be welcome, but I don’t think this alone would cause builders/developers to change their building practices. For those who are already moving towards green, this would be the type of thing that would encourage them to further the cause.

Part of the equation must be on marketing green definitions to builders, developers and consumers.  Greenwashing is wrong, and worse – counterproductive. Market the incentives to consumers so that they will ask and demand “green-ness.” Market to the mortgage brokers to get them to find and educate themselves and consumers about Energy Efficient Mortgages.

– Consider extending the tax break for a three-year period.
– Fast-track green developments/improvements
– Provide incentives to builders to innovate more rapidly. Help them to provide a wider market for homebuyers and homeowners.
– Recognize green renovations as well.

Taxes are one of the most effective ways for government to influence behavior.

Another question is – how many homes in the City limits might qualify? What impact would this have on the City’s budget? (even though they are running a surplus)

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