Government Incentives for Greener Communities

Do government incentives work? And which types of incentives work best? We at the American Institute of Architects (AIA) wanted to know the answers, so we partnered with the National Association of Counties to find out. We have known, anecdotally, for at least ten years, that the use of green building incentives have accelerated, mostly in jurisdictions that show a genuine and continued interest in making their environment more sustainable.

The Local Leaders in Sustainability research project, begun in 2007, seeks to examine green building practices in such communities. Their latest report, Green Building Incentive Trends: Strengthening Communities, Building Green Economies, is a tool for local governments looking to incentivize green design and construction in their communities. It focuses on five key areas: financial costs, oversight structure, local political and cultural environment, limits to power, and industry engagement.

We looked at cities and counties across the country to identify what works best and found some common threads of success. Communities that select incentives sensitive to the local government’s financial situation and communicate their environmental needs, clearly and simply, are more likely to see their plans implemented, than those who disregard these factors.

Green building incentives can range from the virtually cost-free to those that require direct local funding. We have found that the most attractive incentives are tax incentives, density/floor area ratio bonuses, and expedited permitting.  Here I’d like to recognize two successful projects:

Cincinnati created a CRA Property Tax Abatement to advance two intersecting interests: Continue encouraging urban development within the city and nourish the emerging interest among the public as well as the construction development communities. Tax incentives offer abatements of up to 75% of the increased value of the property improvement on commercial and multifamily residential, and up to 100% of the increased value on residential projects of 1-3 units. So Cincinnati is doing exactly what it has set out to do–to increase sustainable development in the city. Since the inception of this program in 2007, Cincinnati has awarded tax abatements to five commercial buildings and another 19 projects have been approved for it, but have not yet received their LEED certification.

Bonus density works best where space is at a premium. That is definitely the case in the urban county of Arlington, VA, directly outside of Washington, DC. Here the green building density bonus program awards private development projects that achieve LEED certification with additional floor space, beyond the amount allowed by the zoning code. This extra capacity is given in the form of a floor area ratio (FAR) bonus (the ratio of a building’s total floor area to the area of land it occupies). The value of this program can be easily seen in this densely settled community. And the results demonstrate its success: 26 buildings (a total of 5,281,408 square feet of multifamily residential and commercial space) have been constructed since 2001. More are in the pipeline.

It is clear that green building incentives help create sustainable communities. In fact, we can report with some confidence, that a market transformation is happening and that these incentives are useful tools to help shift behavior.

Brooks Rainwater is the director of Public Policy at the American Institute of Architects and is responsible for advancing the Institute’s and the profession’s goals at the local level by promoting the AIA’s public policies and empowering local components to effectively manage their legislative, regulatory, and legal efforts. He represents the AIA on several national boards, commissions, and councils, including the National Association of Counties Green Government Advisory Board, the US Conference of Mayors Business Council, and the STAR Community Index Steering Council.