This Issue

Incubator of Green Home Policy

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Advocacy1By Cecilia Shutters

Cincinnati becomes an incubator of green home policy innovation.

 

Ohio is well known for its leadership in green building—impressively, it leads the nation with 150 LEED-certified K–12 schools. The city of Cincinnati uses its home state’s forward-thinking policies to full advantage, taking the state-granted authority to incentivize green building and running with it.

In 2006, Cincinnati enacted the Community Reinvestment Area Residential Tax Abatement Program—in short, a tax abatement program that encourages property improvements via renovations or the construction of new homes. Promoted under the headline “Save Money, Live Well,” the program was enacted to achieve four main policy intentions: stimulate community revitalization, retain city residents, attract homeowners, and reduce development costs for for-sale and rental projects. Here’s how it works. Any resident within the Cincinnati city limits who is renovating or building a new home that increases the property’s value by a minimum of $2,500 (for one- and two-unit structures) and $5,000 (for three-unit structures) can apply for the abatement. (Properties composed of more than four units are considered commercial and can also apply for tax abatement through a corresponding program.)

Once the improvement is complete, the property owner submits an application to the city that is reviewed based on documentation of cost, work completion, and LEED certification (if sought). Finally, the application is forwarded to the Hamilton County Auditor’s Office, which then assesses the improvements and finalizes the abatement’s approval. The end benefit: property owners pay taxes on only the property’s original value, not the improved value, for a time span of either 10 or 15 years.

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Westfalen Lofts consists of three rehabilitated properties with a total of eight units, featuring two-story condominiums and a four-story townhouse. The development was completed by John Hueber Homes and Northpointe Group. (Photo credit: Sara Bedinghaus, Cincinnati Center City Development Corporation)

 

Advocacy3Now for the innovative part: Since 2007, the program has offered increasing maximum abatement amounts based on the level of LEED certification achieved, if any. For new construction projects permitted after January 31, 2013, the maximum abatement ranges from $275,000 for up to 15 years for LEED Certified homes to an unlimited abatement value for up to 15 years for LEED Platinum homes. The same maximum abatement values apply to renovations for up to 10 years. (See the tables opposite for all abatement and LEED-certification values.) Overall, the city of Cincinnati estimates that the tax abatement program has saved participating taxpayers $21.8 million for LEED and non-LEED projects since 2007. Of the 192 single-family homes that applied for LEED certification, 79 are LEED Certified, 87 LEED Silver, 20 LEED Gold, and 6 LEED Platinum. The city’s 2013 program survey found that 40 percent of participating property owners said the tax abatement allowed them to allocate at least an additional $50,000 to their budget. The study also found that owners of LEED-certified homes were more likely than owners of non-LEED-certified homes to say that the tax abatement allowed them to increase their original budget by at least $50,000. “We are proud of LEED’s proven track record for the conception, design, and validation of green homes,” says Roger Platt, senior vice president of global policy and law at the U.S. Green Building Council. “In this case, both state and local leaders have recognized the unique role they play in encouraging the revitalization of Ohio’s communities. “Make no mistake about it,” he continues, “Cincinnati’s policymakers see green as far more than energy efficiency. The tiered nature of this incentive is structured to recognize that LEED-certified homes address a broad range of environmental and health imperatives, making LEED-certified homes more desirable places to live and more desirable structures for governments to promote.”