MEMORANDUM EXPECTED ATTENDEES BACKGROUND. T&E/GO#l March 8, March 6, 2018 TO:

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1 T&E/GO#l March 8, 2018 MEMORANDUM March 6, 2018 TO: FROM: Transportation, Energy & Environment Committee Government Operations and Fiscal Policy Committee Jacob Sesker, Senior Legislative Analyst (i{..., Keith Levchenko, Senior Legislative Analyst A~ SUBJECT: Discussion: Property tax credit--energy and environmental design I PURPOSE: Discuss key issues and provide feedback to help frame stakeholder engagement efforts EXPECTED ATTENDEES Bonnie Kirkland, ACAO; Diane Jones and Mark Nauman, DPS; Stan Edwards and Lindsey Robinett Shaw, DEP; Mike Coveyou, Finance; Robert Kronenberg, Michael Brown and Tina Schneider, Planning. BACKGROUND On September 14 the joint committees met for a preliminary discussion about issues related to the current property tax credit for energy and environmental design. See September 14 memo at 1 and attachments at 9. At that time, members of the joint committees asked for Executive Branch positions on key issues. Having now met with the County Executive, Executive staff is prepared to discuss its positions on several of the key issues identified below. ISSUES Should eligibility for the credit be determined based on a LEED rating, ZEPI score, or some other measure? The County's current program is tied to the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. However, the County's new International Green Construction Code is associated with the ZEPI rating system. Executive staff will be present to discuss. Should credit eligibility be tied to a specified ZEPI score or rating? Or should credit eligibility require exceeding the applicable baseline standard? Given that the building code requirements will periodically change, it makes sense to set credit eligibility at a specified percentage beyond the baseline requirements of code compliance. Executive staff will be present to discuss. The Bethesda Downtown Plan sets a target for new development in the High Performance Area (HPA) that is different from the requirement for all new development countywide. The Planning Department has indicated that its goal for new development in Bethesda is a ZEPI score of 46, which is 8% beyond the

2 requirements in the building code. Staff from the Planning Department will be present to discuss the relationship between the HP A and the standards established in the IgCC. Should there be a tax credit for high-performance residences? Montgomery County does not have a High-Performance Home Tax Credit. The County's law was adopted before the State law (Tax-Property 9-242) was changed to allow tax credits to residential buildings. If high-performance residences are to be eligible for a tax credit, it will be necessary to set eligibility thresholds, and to determine whether residential credits should be capped. Executive staff will be present to discuss. Should the credit program also incentivize retrofits of existing buildings? Green building is intended to minimize the impacts of buildings and structures on the environment. At any given time, almost all buildings and structures are ones that have existed for several years. As such, retrofitting existing buildings is one way to reduce the environmental impact of buildings and structures. Executive staff will be present to discuss. Should the program be based on one-time determinations of eligibility, or ongoing monitoring of building performance? During the September 14 discussion, DPS indicated a preference for measuring sustainability and energy efficiency on an ongoing basis, rather than just based on the design of the core and shell. On the other hand, a one-time determination is likely to be both easier to administer for the Department of Finance, and provide more certainty for investors. Executive staff will be present to discuss. Should the program grandfather some projects that are already in the pipeline? Some real estate projects in the planning and development phases are presumably assuming that this credit program will continue. If the Council intends to change the credit program, one question will be whether to grandfather some projects in the planning or development process. Executive staff will be present to discuss. Should a sunset date be included in the legislation? Sunsetting tax credit programs ensures that the tax credit expenditure stops once the program objectives are achieved. Inherently, this involves a review and, when appropriate, a recalibration of the program. Such a review could address: (1) the purpose for which the program was established; (2) whether the original purpose remains relevant in the marketplace; (3) whether the program is meeting performance objectives; (4) whether the goals of the program could be better achieved through other means; and (5) the cost of the program both in terms of tax expenditure and program administration. Executive staff will be present to discuss. Attachments: September 14, 2017 Memo Data Montgomery List of LEED Projects in Montgomery County Silverman memo County Code Sec F:\Sesker\policy research projects\leed building tax credit\leed tax credit part two.doc 2

3 T&E/GO#l September 14, 2017 MEMORANDUM September 12, 2017 TO: Transportation, Energy & Environment Committee Government Operations and Fiscal Policy Committee FROM: Jacob Sesker, Senior Legislative Analyst '>.fr ~eith Levchenko, Senior Legislative Analyst SUBJECT: Discussion: Property tax credit~nergy and environmental design BACKGROUND Since 2004, Maryland has permitted local governments (Md Code: Property Tax 9-242) to offer property tax credits for high performance buildings. In 2007, Montgomery County exercised that authority with the passage of Bill (Property Tax Credit-Green Buildings). Montgomery County's property tax credit is codified in Sec ( I 1-12) (Property tax credit- energy and environmental design). The purpose of this worksession is to review the local law and its implementation. Attendees are likely to include Bonnie Kirkland, Assistant Chief Administrative Officer; Mike Coveyou (Finance); Diane Jones (Permitting Services); Mark Nauman (Permitting Services) and Stan Edwards (Environmental Protection). This review is timely due for several reasons, including: l. The Council's current review of Executive Regulation 21-l SAMII, Adoption of the 2012 International Green Construction Code, which narrows (and, in some cases, closes) the gap between base requirements and tax credit incentives. 2. A growing queue of credits in the current tax credit program. 3. Increasing participation in the High-Performance Home tax credit programs in neighboring jurisdictions (Montgomery County does not have a similar program for single-family residential). MONTGOMERY COUNTY'S PROGRAM The County's credit program is administered by the Department of Finance. The Director of the Department of Finance must allow a tax credit each eligible year against the property tax imposed on a high-perfonnance building. Credits are calculated as a percentage of the property tax owed. The amount or calculation of the credit varies depending upon the characteristics of the building and the rating achieved by the building. Eligible, new high perfonnance buildings can receive the credits for 5 years, (j)

4 while eligible, existing high performance buildings can only receive the credits for 3 years. The County's program is tied to the Leadership in Energy and Environmental Design {LEED) Green Building Rating System. LEED identifies criteria that positively impact the energy and environmental characteristics of a building, including sustainability of a site, water efficiency, energy efficiency, materials and resources, and indoor environmental quality. "Covered" buildings-meaning those that are newly constructed or extensively modified nonresidential or multi- family residential buildings that have or will have at least 10,000 square feet of gross floor area---can only receive the credit if certified at the gold or platinum (or equivalent) level, while buildings that are not "covered" can also receive the credit if they are certified at the silver (or equivalent) level. 1 Credits are highest for platinum buildings, then gold, and then silver. For a "covered building," the amount of the credit, as a percentage of property truces owed, is: New building that achieves LEED-NC or LEED-CS Gold, the credit is 25% for 5 years. Existing building that achieves LEED-EB Gold, the credit is 10% for 3 years. New building that achieves LEED-NC or LEED-CS Platinum, the credit is 75% for 5 years. Existing building that achieves LEED-EB Platinum, the credit is 50% for 3 years. For any other building, the amount of the credit is: New building; LEED-NC or LEED-CS Silver; 25% for 5 years. Existing building; LEED-EB Silver rating; 10% for 3 years. New building; LEED-NC or LEED-CS Gold; 50% for 5 years. Existing building; LEED-EB Gold; 25% for 3 years. New building; LEED-NC or LEED-CS Platinum; 75% for 5 years. Existing building; LEED-EB Platinum; 50% for 3 years. FY18 LEED Building Tax Credits Covered Building Other Building Total TYPE Multifamily Commercial Multifamily Commercial #/Amount Silver Gold Platinum $0 $0 $0 $112,384 $112, $342,722 $632,739 $0 $1,142,425 $2,117, I 1 5 $0 $2,140,509 $604,678 $24,543 $2,769,730 Total 29 $3,115, $1,884,030 Commercial 19 $4,052, % Multi-family 24 $947, % 1 Though the County law clearly creates paths for both "covered" buildings and other buildings, Finance does not provide a credit to a single family residential home because the State enabling law did not allow credits to single family residential buildings at the time that the County credit was created.

5 "Covered buildings" represent 29 of the 43 buildings receiving credits in FYI8, and $3.1 million of the $5.0 million in credits issued. Credits of almost $4.1 million were issued to 19 commercial buildings in FYI 8, while credits of more than $900,000 were issued to 24 multi-family buildings. See table, above. Volume caps are another characteristic of the County's program. During any fiscal year, the total credits granted to all buildings eligible for the credit must not exceed $5 million. Within that $5 million annual cap, the County's program has two other limits: credits to buildings that achieve a silver rating or equivalent standard must not exceed $1.5 million, and credits to buildings that achieve a gold rating or equivalent standard must not exceed $2.5 million. The tax credit is one of several policies, requirements and incentives that are intended to advance the County's environmental objectives. Executive staff articulated the policy context of the current program in the following manner: Green building is intended to minimize the impacts of buildings and structures on the environment. As shown in County's Climate Protection Plan, buildings contribute significantly to greenhouse gas emissions, and the need for green building codes and/or standards is explicitly called for in the Plan. However, green building codes and standards can address a wide range of sustainability needs beyond greenhouse gas reductions, including protection of natural resources, stormwater management, reduction in waste generation, promotion of alternative transportation systems, and a variety of other development attributes that may be important to the County. Building codes and standards, and supporting incentives like tax credits, should be structured to promote the policy objectives the County is trying to achieve. J. Tax credit as incentive DISCUSSION At the time the credit was first authorized, green buildings were not as common as they are today. Current demand for green buildings comes mostly from office tenants, institutional investors, and institutional and governmental end-users. Those drivers of demand perceive sufficient short-term returns and long-term value creation to justify the costs. In response to Council staff's inquiries regarding evidence that the tax credit is an effective incentive, Executive staff provided the following response: It is very difficult to determine to what extent tax credits are actually incentivizing green building policies/policy goals. There are other significant factors that motivate green construction including legal mandates (e.g., Montgomery County Code 8-48 et seq.), the CR zone which provides public benefits points and related densities for many categories that are consistent with LEED scoring categories (transit proximity, reduced parking and trip mitigation, neighborhood services, streetscape, cool roof. energy conservation and generation, habitat preservation, recycling plan, vegetated areas, etc.), market demand for green construction (LEED certifications are believed to generate higher rents), and federal facilities leases. Finance indicates that there are 928 LEED certified buildings in Maryland, 257 of which are in Montgomery County (28%). A partial list of LEED certified buildings in Montgomery County (from Data Montgomery) is attached at 1. Per Finance, of the 138 homes in Maryland certified under LEED for Homes, only 18 (13%) are in Montgomery County. Howard County, which has a LEED for Homes Program, has 80 of the 138 LEED homes in Maryland. 2 2 A valid question in Montgomery County, Howard County, and elsewhere is the extent to which the existing tax credit program is incentivizing green construction versus incentivizing LEED certification. It may be that more

6 While it is not possible to detennine whether the tax credit is still an effective incentive, it is certainly true that the amount of credits has increased from $1.3 million in levy year 2009 to $5.0 million in levy year 2016 (with an additional $1.3 million in the queue). This may indicate some inefficiency in the current credit program, i.e. that the County is incentivizing activities that need no additional incentive, or that the incentive amount is overly generous. 2. LEED and the Green Bu.ii.ding Code Executive branch staff provided the following explanation of the relationship between the credit and the building code: As thelntemational Green Construction Code (lgcc) was initially promulgated in Executive Regulation when transmitted in September, 2016, it was not anticipated that the IgCC would have a significant impact upon the tax credits for certain LEED certified buildings as the IgCC sets a baseline for construction and building performance and LEED certifications could be used to push the ceiling beyond the baseline requirements. Since transmittal of the Executive Regulation 21-15, the Department of Permitting Services was asked to follow-up with certain stakeholders to discuss concerns and their desire for a LEED based alternative compliance pathway. As a result, some proposals have been discussed that, if adopted, would allow certain LEED certifications to serve as an alternate compliance pathway. If that occurs the effect could be that such LEED certified projects would be offered in satisfaction of base code requirements and be eligible for a tax credit. In such case, it makes sense to revisit the tax credit as it is intended as an incentive to push the ceiling for green construction and not for projects that do not exceed code. Certainly, it makes little sense to incentivize something that is otherwise required by law. As the Council adopts the International Green Building Code, it is important to keep in mind that some new buildings will potentially be eligible for the tax credit simply for complying with the law, and others will be credit eligible for very little additional cost or societal benefit beyond the costs and benefits of simply complying with minimum standards. 3. Caps and Queues Once the cap is reached, other approved credits are positioned in a queue. The queue is operated on a first-in, first-out basis. The Gold credits have been exceeding the cap for several years. There is one account in the queue for Platinum credits. Overall, total credits in the queue are $1.5 million. Montgomerv Countv LEED Building Tax Credits, LY 2009 to 2017 Levy Year Fiscal Year Cap Credits Queue $5,000,000 $1,295, $5,000,000 $1,507, $5,000,000 $1,717, $5,000,000 $2,922, $5,000,000 $4,053, $5,000,000 $3,463, $5,000,000 $3,534, $5,000,000 $5,000,000 $1,317, $5,000,000 $5,000,000 $1,500,059 homes built to green construction standards are seeking LEED certification in Howard County because of the availability of tax credits. 0

7 Finance provided the following response to questions about the queue: Currently, for FYl8 there is only a queue for the Gold credits, but there is also a limit on the entire program because the Platinum credits caused the entire program to exceed the $5 million annual cap on the total program. this is the first time that the program has met the $5 million cap. Chapter (e) requires that credits be given in the order that applications are received, both for those applications for which credits are available, and for those applications that will exceed the annual limits on the program and must be funded in a future year (see (e)(J) and (e)(3).... The platinum buildings take whatever capacity the total $5 million program may still have. Until FY18 we have never reached the $5 million limit. However, the Gold credits have been exceeding the cap for the last several years. Currently Silver credits are all funded, there are several accounts with Gold certifications that have not received full credits (some accounts have not received any credits yet), and one of the Platinum account is not fully funded (for FY18 only). For FY19, any new Silver accounts will be over the cap and therefore unfunded, until there is capacity within the $5 million total cap (that is, when some Gold and/or Platinum credits have ended). Some Gold accounts will continue to wait for funding, and any new Silver, Gold or Platinum accounts will be queued Platinum credits for the past two years have been near or above $2.5 million ($2.8 million in Levy Year 2017, $2.4 million in Levy Year 2016). Currently, a substantial queue ($1.5 million) exists for Gold credits. As such, to address the queue issues moving forward, it will be necessary to either (a) limit new credits to those properties achieving LEED Platinum or equivalent, or (b) change the credit calculations. 4. High-Performance Homes Montgomery County does not have a High-Performance Home Tax Credit. The only LEED certifications for which the tax credit law has been allowed are LEED-NC, LEED-CS, and LEED-EB, all of which are certifications for commercial or multi-family buildings. The County's law was adopted before the State law (Tax-Property 9-242) was changed to allow tax credits to residential buildings. Prior to that change, the County was not authorized to extend the credit to residential dwellings. While Montgomery County is authorized to do so, it has not chosen to extend the credit to residential dwellings. Steve Silverman, representing Lennar, has provided information about programs in other counties and outlined a potential structure for a Montgomery County program on 7-9. While there is no local tax credit in Montgomery County, there are several high-performance homes in Montgomery County. Per the US Green Building Council, there are two LEED Platinum homes in Montgomery County (not including a test facility on the NIST campus): 5133 Fairglen Lane, Chevy Chase; and 6301 West Halbert Road, Bethesda. There are two, LEED Gold homes in Montgomery County: 9207 Kirkdale Road, Bethesda; and 4234 Everett Street, Kensington. There are four LEED Silver homes in Montgomery County: 6507 Highland Avenue, Takoma Park; 5601 Lone Oak Drive, Bethesda; 5120 Fairglen Lane, Chevy Chase; and 8403 Whitman Drive, Bethesda. There are five LEED Certified homes in Montgomery County: 5913 Lone Oak Drive, Bethesda; 5707 Lone Oak Drive, Bethesda; 5709 Lone Oak Drive, Bethesda; 5312 Bradley Boulevard, Bethesda; and 7203 Oakridge A venue, Chevy Chase. While Montgomery County has never extended the law to include single family attached or detached homes, other Maryland jurisdictions do offer such credits. These "High Perfonnance Homes" 0

8 credits in other jurisdictions are for three to five years, and reduce property taxes by 40% to I 00%, depending upon the jurisdiction. Anne Arundel County's tax credit program is administered by the Office of Finance. Anne Arundel County does not have a program for commercial buildings. A high-performance dwelling is a "principal residential structure" and must be the applicant's primary residence. Principal residential structures that are LEED or NGBS Silver qualify for a 5-year credit of 40% of taxes owed, up to $1,000 per year. Principal residential structures that are LEED or NGBS Gold qualify for a 5-year credit of 60% of taxes owed, up to $2,000 per year. Principal residential structures that are LEED or NGBS Platinum qualify for a 5-year credit of 80% of taxes owed, up to $3,000 per year. Generally, between 6 and l 2 new applications are received every year for Anne Arundel County's multi-year credit. In FYI8, a total of 38 properties received credits, including 11 properties receiving credits for the first time. Over time, as new properties begin receiving credits, both the number of properties receiving credits and the total dollar amount of credits have increased. Anne Arundel County, High Performance Dwelling Credits, FYl 4-FYI 8 Date Fiscal Total credit amount LEED Rating Number of properties Year receiving credit Silver 18 l-jul-14 FY15 $21,599 Gold 0 Platinum / Emerald 2 Silver 20 1-Jul-15 FY16 $22,425 Gold 0 Platinum / Emerald 2 Silver 28 1-Jul-16 FY17 $33,755 Gold 1 Platinum / Emerald 2 Silver 34 1-Jul-17 FY18 $39,768 Gold 2 Platinum/ Emerald 2 Baltimore County's tax credit program is administered by the Office of Budget and Finance. Baltimore County has programs both for residential and non-residential buildings. Under Baltimore County's law, a High-Performance Home is defined as a new or renovated residential structure that achieves at least a silver rating per the U.S. Green Building Council's LEED (Leadership in Energy and Environmental Design) for Homes rating system or achieves certain scores on the Home Energy Rating System (HERS) Index, developed by the Department of Energy, which measures the overall energy efficiency for new construction as well as renovated properties. Interestingly, the Office of Budget and Finance indicated that no applicant has chosen the LEED pathway to the High-Performance Home Credit Principal residential structures that are LEED or NGBS Silver qualify for a 3-year credit of 40% of taxes owed. Principal residential structures that are LEED or NGBS Gold qualify for a 3-year credit of 60% of taxes owed. 0

9 Pri~cipal residential structures that are LEED or NGBS Platinum qualify for a 3-year credit of 100% of taxes of owed. The tax credit is 5-years if the property is carbon neutral. The Office of Budget and Finance also administers a High-Performance Building tax credit for commercial buildings, including multi-family structures with at least 50 dwelling units. New construction high-performance buildings that are LEED-NC Silver qualify for a 5-year credit of 50% of the taxes owed. New construction high-performance buildings that are LEED-NC Gold qualify for a 5-year credit of 60% of the taxes owed. New construction high-performance buildings that are LEED-NC Platinum qualify for a 5-year credit of 70% of the taxes owed. New construction high-performance buildings that are LEED-CS Silver qualify for a 5-year credit of 40% of the taxes owed. New construction high-performance buildings that are LEED-CS Gold qualify for a 5-year credit of 50% of the taxes owed. New construction high-performance buildings that are LEED-CS Platinum qualify for a 5-year credit of 60% of the taxes owed. Existing high-performance buildings that are LEED-EB Silver qualify for a 3-year credit of I 0% of the taxes owed. Existing high-performance buildings that are LEED-EB Gold qualify for a 3-year credit of 25% of the taxes owed. Existing high-performance buildings that are LEED-EB Platinum qualify for a 3-year credit of 50% of the taxes owed. Following a steep increase in the High-Performance Building Credit amount leading up to FYIS, the credit amount has decreased by more than 20% over the past 4 years. The credit amount in the High Performance Home program has increased sharply each of the past 5 years. Baltimore County, High Performance Building/ Dwelling Credits, FY13-FYI8 Fiscal Year High Performance Building Credit High Performance Dwelling Credit Amount Amount FY13 $510,258 $28,778 FY14 $1,271,309 $49,861 FY15 $1,405,799 $141,656 FY16 $1,343,374 $227,460 FY17 $1,148,106 $639,363 FY18 $1,036,438 $846,850

10 Given the significant disparity between utilization of the programs in Anne Arundel and Baltimore counties, it is reasonable to conclude that a LEED-based High-Performance Homes program would require less cap space than one involving any alternative pathway. What is not clear is whether any such program would incentivize development of additional inventory meeting the relevant LEED standards, or simply reward a small number of projects that would meet comparable energy efficiency standards even in the absence of the credit. RECOMMENDATIONS As the joint committees consider potential legislative changes to the program, Council staff recommends the following framework: (I) end/phase out the tax credit for LEED Silver; (2) end/phase out the tax credit for LEED Gold; and (3) include a sunset clause to ensure that the program is periodically revisited. If the joint committees direct staff to include a High-Perfonnance. Homes tax credit in the legislation, staff recommends a credit for LEED Platinum single-family (attached or detached) primary residences within the overall $5 million cap. A variant on this approach would be to create a credit for both LEED Gold and LEED Platinum homes, revisiting the LEED Gold homes credit along with all other program components on the sunset date established in the legislation. Attachments: Data Montgomery List of LEED Projects in Montgomery County Silverman memo County Code Sec F:\Sesker\policy research projects\leed building tax credit\leed tax credit review.doc

11 Certification level Building Name Certification date City Rating system Version (name) Olney Library 5/15/2015 0:00 Olney New Construction v2.2 Gold Bel Pre ES 4/7/2015 0:00 Silver Spring Schools - New Construction v2009 Gold Candlewood Elementary School 4/7/2015 0:00 Rockville Schools - New Construction v2009 Silver Herbert Hoover MS 3/25/2015 0:00 Potomac Schools - New Construction v2007 Gold Pike & Rose Block 12 3/23/2015 0:00 Rockville New Construction v2009 Certified Harris Teeter Store 409 3/13/2015 0:00 Clarksburg Retail - New Construction v2009 Certified Fenwick Station 3/13/2015 0:00 Silver Spring New Construction v2009 Gold Saint Patricks Parish Center 3/11/2015 0:00 Rockville New Construction v2009 Certified Wilson Wims Elementary School 3/2/2015 0:00 Clarksburg Schools - New Construction v2009 Gold Store 0469 Wheaton-Georgia Ave 2/26/2015 0:00 Silver Spring Existing Buildings v2009 Gold Store 0552 Bethesda-River Rd 2/26/2015 0:00 Bethesda Existing Buildings v2009 Gold Store 0493 Germantown-Wisteria Dr 2/26/2015 0:00 Germantown Existing Buildings v2009 Gold Wheaton Apartments 2/6/2015 0:00 Wheaton New Construction v2009 Silver The George Apartments 2/4/2015 0:00 Silver Spring New Construction v2009 Certified SEED Homes at 5709 Lone Oak 12/30/2014 0:00 Bethesda Homes v2008 Certified Crown Farms Buildings A & B 1/8/2015 0:00 Gaithersburg New Construction v2.2 Certified Equip. Maintenance and Operations Center 12/19/2014 0:00 Rockville New Construction v2.2 Gold The Aurora at NBC 12/19/2014 0:00 North Bethesda New Construction v2.2 Silver JBG 5635 Fishers Lane 12/9/2014 0:00 Rockville Existing Buildings v2009 Silver Aquilino Cancer Center 12/4/2014 0:00 Rockville Core and Shell v2009 Gold Weller Road ES 12/2/2014 0:00 Silver Spring Schools - New Construction v2007 Gold Highland Avenue 11/13/2014 0:00 Clarksburg Homes v2008 Silver 5601 Fishers Lane Base Building 11/25/2014 0:00 Rockville Core and Shell v2009 Gold 4500 East West Highway LLC 11/5/2014 0:00 Bethesda Core and Shell v2.0 Platinum Suburban Hospital Campus Enhancement Bethesda Healthcare v2009 Gold Aventura North 9/30/2014 0:00 Silver Spring Retail - New Construction vl.0 pilot Certified The Premier 9/8/2014 0:00 Silver Spring New Construction v2009 Silver Derwood Bible Church Expansion 8/22/2014 0:00 Derwood New Construction v2009 Silver Bethesda Crossing North 6/4/2014 0:00 Bethesda Existing Buildings v2009 Gold Towneplace Suites at Frederick Maryland 8/21/2014 0:00 Bethesda New Construction v2.2 Silver Beverly Farms ES 7/31/2014 0:00 Potomac Schools - New Construction v2007 Gold Silver Spring Metro Plaza /21/2014 0:00 Silver Spring Existing Buildings v2009 Gold Silver Spring Metro Plaza /21/2014 0:00 Silver Spring Existing Buildings v2009 Gold B

12 Silver Spring Metro Plaza /21/2014 0:00 Silver Spring Existing Buildings v2009 Gold Residence Inn Silver Spring 7/2/2014 0:00 Silver Spring Existing Buildings v2009 Gold The Gallery at Bethesda Phase 1 6/27/2014 0:00 Bethesda New Construction v2.2 Gold 6700 Rockledge ste500 6/16/2014 0:00 Bethesda Commercial Interiors v2009 Gold Plum Gar Recreation Center 6/13/2014 0:00 Germantown New Construction v2009 Silver Courtyard by Marriott at Aberdeen Airpor 6/2/2014 0:00 Bethesda New Construction v2.2 Certified Victory Crossing Silver Spring New Construction v4 Platinum Safeway /16/2014 0:00 Wheaton Retail - Commercial Interiors v2009 Gold FDA Bldg 66 CDRH 11/21/2010 0:00 Silver Spring New Construction v2.2 Gold Building One - FDA Consolidation 2/22/2010 0:00 Silver Spring New Construction v2.2 Gold FDA Bldg OC/ORA 10/17/2011 0:00 Silver Spring New Construction v2.2 Gold FDA Bldg 2 CSU 3/19/2010 0:00 Silver Spring New Construction v2.1 Silver Marriott Headquarters 2/22/2010 0:00 Bethesda Existing Buildings v2008 Gold Two Rockledge Center 4/8/2014 0:00 Bethesda Existing Buildings v2009 Gold 3 White Flint North 5/1/2013 0:00 Rockville New Construction v2.2 Gold Garrett Park Elementary School Addition 4/3/2014 0:00 Kensington Schools - New Construction v2007 Gold The Providence at Lone Oak 5/15/2013 0:00 Bethesda Homes v2008 Silver Bradley Blvd Model Home 11/4/2011 0:00 Bethesda Homes v2008 Certified Whalley-Otto 8/3/2010 0:00 Kensington Homes v2008 Gold 7203 Oakridge Ave. 2/7/2011 0:00 Chevy Chase Homes v2008 Certified 5133 Fairglen 3/11/2010 0:00 Chevy Chase Homes v2008 Platinum Hyatt House 5/22/2012 0:00 Bethesda Homes v2008 Platinum Courtyard by Marriott at Briarcliff 3/31/2014 0:00 Bethesda New Construction v2.2 Certified QIAGEN Germantown Campus Expansion 3/25/2014 0:00 Germantown New Construction v2009 Silver WB - 10th Fl Interior Renovation 3/20/2014 0:00 Rockville Commercial Interiors v2009 Silver ICF Rockville Floors 1 and 2 3/7/2014 0:00 Rockville Commercial Interiors v2009 Gold MandT DiamondFarms 2/26/2014 0:00 Gaithersburg New Construction v2009 Certified Rockville Metro Plaza Phase II 2/24/2014 0:00 Rockville Core and Shell v2.0 Platinum Glenallan ES 1/30/2014 0:00 Silver Spring Schools - New Construction v2007 Gold ASHA: Auerbach Law 1/27/2014 0:00 Rockville Commercial Interiors v2009 Silver Montgomery B 1/15/2014 0:00 Bethesda Existing Buildings v2009 Gold Chevy Chase 1/7/2014 0:00 Chevy Chase Existing Buildings v2009 Gold Lake Forest 1/7/2014 0:00 Gaithersburg Existing Buildings v2009 Gold TD Bank - Olney MD - Town Center Dr 1/2/2014 0:00 Olney Retail - New Construction v2009 Gold Milestone Building 3 6/28/2010 0:00 Germantown Core and Shell v2.0 Gold

13 Milestone Building 1 4/27/2010 0:00 Germantown Existing Buildings v2008 Silver Milestone Center Drive 12/6/2013 0:00 Germantown Core and Shell v2009 Silver The Citron 11/26/2013 0:00 Silver Spring New Construction v2009 Silver Paint Branch High School 10/30/2013 0:00 Burtonsville New Construction v2.2 Gold Adventist HealthCare - Support Center 10/29/2013 0:00 Gaithersburg Commercial Interiors v2009 Gold 9200 Corporate Boulevard 10/14/2013 0:00 Rockville Existing Buildings v2009 Gold Kohl's Silver Spring 4/19/2012 0:00 Silver Spring Existing Buildings v2009 Certified 7201 Wisconsin Ave 9/30/2013 0:00 Bethesda Existing Buildings v2009 Gold Buffington Building II 9/26/2013 0:00 Clarksburg Core and Shell v2009 Certified 5120 Fairglen Lane 2/16/2011 0:00 Chevy Chase Homes v2008 Silver 8403 Whitman Drive 3/22/2011 0:00 Bethesda Homes v2008 Silver Flora M. Singer Elementary School 8/15/2013 0:00 Silver Spring Schools - New Construction v2007 Gold Cohen Rosen House 9/17/2013 0:00 Rockville New Construction v2009 Silver Bialek Environments 9/11/2013 0:00 Rockville Commercial Interiors v2009 Silver Building41 8/30/2013 0:00 Bethesda Commercial Interiors v2.0 Certified 7550 Wisconsin Avenue 8/6/2013 0:00 Bethesda Core and Shell v2009 Gold Montgomery A 7/31/2013 0:00 Bethesda Existing Buildings v2009 Gold GPI Rockville 7/22/2013 0:00 Rockville Commercial Interiors v2009 Platinum Skanska Rockville Office 6/28/2013 0:00 Rockville Commercial Interiors v2009 Gold Naval Exchange - Bethesda 6/18/2013 0:00 Bethesda New Construction v2.2 Gold OLBN Office Relocation 6/12/2013 0:00 Rockville Commercial Interiors v2009 Silver Olney Assisted Living 6/4/2013 0:00 Olney New Construction v2009 Certified Democracy Center 5/20/2013 0:00 Bethesda Existing Buildings v2009 Gold PNC Bank Branch Cabin John 5/14/2013 0:00 Potomac Retail - Commercial Interiors v2009 Silver FDA Child Care Center 4/15/2013 0:00 Silver Spring New Construction v2.2 Gold Bethesda Place 4/11/2013 0:00 Bethesda Existing Buildings v2008 Gold Tower One 4/2/2013 0:00 Rockville Existing Buildings v2009 Gold JBG 1 Choke Cherry Road LLC 4/1/2013 0:00 Rockville Existing Buildings v2009 Silver Takoma Park Public Works Facility 3/28/2013 0:00 Silver Spring New Construction v2009 Silver White Oak Recreation Center 3/28/2013 0:00 Silver Spring New Construction v2.2 Gold Twinbrook Station 11/10/2008 0:00 Rockville Neighborhood Development vl.o pilot Gold NASDAQ OMX 11/20/2012 0:00 Rockville Commercial Interiors v2009 Gold The Boston Consulting Group 7/30/2011 0:00 Bethesda Commercial Interiors v2009 Silver Lockheed Martin Gaithersburg182 3rd Fir 3/19/2013 0:00 Gaithersburg Commercial Interiors v2009 Gold Kol Shalom Phase 1 3/12/2013 0:00 Rockville New Construction v2.2 Gold 0

14 1150 Ripley Street 2/27/2013 0:00 Silver Spring New Construction v2.2 Gold Democracy2 10/31/2012 0:00 Bethesda Existing Buildings v2009 Certified Democracy 1 10/31/2012 0:00 Bethesda Existing Buildings v2009 Silver Cabin John Middle School 10/15/2012 0:00 Potomac Schools New Construction v2007 Gold Discovery Communications Global HQ 12/20/2007 0:00 Silver Spring Existing Buildings v2.0 Platinum 7700 Old Georgetown Road- Garden Plaza 7/13/2012 0:00 Bethesda Core and Shell v2009 Gold Carderock Springs ES Modernization 5/9/2011 0:00 Bethesda Schools - New Construction v2007 Gold Twinbrook Place 5/25/2010 0:00 Rockville Core and Shell v2.0 Gold William B Gibbs ES (Clarksburg No 8) 7/15/2010 0:00 Germantown New Construction v2.2 Gold Parklawn Building 2/18/2010 0:00 Rockville Core and Shell v2.0 Gold Ruppert Landscape Corporate Headquarters 4/6/2012 0:00 Laytonsville New Construction v2.2 Gold One Washingtonian Center - Transwestern 2/27/2009 0:00 Gaithersburg Existing Buildings v2008 Certified IBM Bethesda 10/13/2011 0:00 Bethesda Commercial Interiors v2009 Gold Fitzgerald Toyota Certified Used 3/3/2010 0:00 Germantown New Construction v2.2 Gold Discovery Child Care Center 8/26/2009 0:00 Silver Spring Commercial Interiors v2.0 Gold German School Science Building 8/24/2012 0:00 Potomac Schools - New Construction v2007 Gold Two Wisconsin Circle 11/21/2011 0:00 Chevy Chase Existing Buildings v2008 Certified The Newlands Building 1/19/2012 0:00 Bethesda Existing Buildings v2008 Certified Four Irvington Centre 7/17/2012 0:00 Rockville Existing Buildings v2009 Gold Cashell Elementary School 10/4/2010 0:00 Rockville Schools New Construction v2007 Gold MID-COUNTY RECREATION CENTER 2/7/2012 0:00 Silver Spring New Construction v2.1 Certified NIST Child Care Center 9/6/2012 0:00 Gaithersburg New Construction v2009 Gold M&T Bank Pike Center 6/17/2011 0:00 Rockville New Construction v2.2 Gold Ingleside at King Farm 5/10/2010 0:00 Rockville New Construction v2.2 Certified One Washingtonian Center recertification 6/28/2010 0:00 Gaithersburg Existing Buildings v2009 Platinum Francis Scott Key Middle School 8/22/2009 0:00 Silver Spring New Construction v2.2 Gold Global Environment Fund 9/11/2009 0:00 Chevy Chase Commercial Interiors v2.0 Gold ASHA New Headquarters Building 8/22/2008 0:00 Rockville New Construction v2.1 Gold CBRE - Bethesda Office 6/29/2012 0:00 Bethesda Commercial Interiors v2009 Silver New Hampshire Avenue 6/15/2010 0:00 Silver Spring Core and Shell v2.0 Gold Cresthaven ES 11/2/2011 0:00 Silver Spring Schools - New Construction v2007 Gold PNC Bank Branch - Wootton Parkway 1/16/2012 0:00 Rockville Retail - New Construction vl.0 pilot Silver Walter Reed National Military Medical Cr 1/21/2011 0:00 Bethesda New Construction v2.2 Gold Glenmont Station Parking Structure 12/3/2012 0:00 Silver Spring New Construction v2.2 Silver GSA - CDER Storage Facility 1/18/2010 0:00 Rockville Commercial Interiors v2.0 Silver

15 Takoma Park Auditorium 3/8/2011 0:00 Takoma Park Commercial Interiors v2.0 Silver Olney Town Center 6/27/2012 0:00 Olney New Construction v2.2 Certified AC Moore 6/25/2012 0:00 Rockville Retail - Commercial Interiors v2009 Certified EDGE Professional Services HQ 4/24/2012 0:00 Rockville Commercial Interiors v2009 Gold Germantown-East Fire Station #34 2/21/2012 0:00 Germantown New Construction v2.2 Certified Cannon Road Elementary School 9/25/2012 0:00 Silver Spring Schools - New Construction v2007 Gold 801 Thompson Avenue 7/27/2011 0:00 Rockville Existing Buildings v2009 Gold Montrose Metro I 9/20/2012 0:00 Rockville Existing Buildings v2009 Silver National Intrepid Center of Excellence 11/10/2010 0:00 Bethesda New Construction v2.2 Silver ICF Maryland: 530 Gaither Road 9/17/2012 0:00 Rockville Commercial Interiors v2009 Platinum Safeway /28/2012 0:00 Olney Retail - New Construction v2009 Gold. Safeway /30/2012 0:00 Bethesda Retail - New Construction v2009 Gold Silver Spring Plaza 7/21/2010 0:00 Silver Spring Existing Buildings v2008 Certified Century Plaza 7/29/2011 0:00 Germantown Core and Shell v2.0 Gold Monument Corporate Center 1 1/8/2008 0:00 Gaithersburg Core and Shell vl.o pilot Silver TD Bank - Gaithersburg MD - Shady Grove 2/29/2012 0:00 Gaithersburg New Construction v2009 Gold TD Bank - Colesville Rd Silver Spring MD 8/6/2012 0:00 Silver Spring Commercial Interiors v2009 Silver Consumer Product Safety Commission 10/19/2011 0:00 Rockville Commercial Interiors v2009 Silver Blairs Residential Campus 7/25/2012 0:00 Silver Spring Existing Buildings v2009 Gold The Tower Building 6/2/2009 0:00 Rockville Existing Buildings v2.0 Silver Gaithersburg Youth Center 11/3/2006 0:00 Gaithersburg New Construction v2.1 Certified Enviva LP 5/23/2011 0:00 Bethesda Commercial Interiors v2009 Silver Seven Locks Elementary School 12/26/2012 0:00 Bethesda Schools - New Construction v2007 Gold Howard Hughes Medical Institute - Headqu 10/24/2011 0:00 Chevy Chase New Construction v2.2 Gold Courtyard 11/16/2009 0:00 Chevy Chase New Construction v2.2 Gold Eastern Village Cohousing Condominium 9/26/2005 0:00 Silver Spring New Construction v2.1 Silver The Tower Companies, Headquarters 6/2/2009 0:00 Rockville Commercial Interiors v2.0 Platinum Reznick Group HQ 2/28/2012 0:00 Bethesda Commercial Interiors v2009 Silver Great Seneca Elementary School 4/18/2007 0:00 Germantown New Construction v2.1 Gold BAE Systems TSS - Redland 1/4/2011 0:00 Rockville Commercial Interiors v2.0 Silver Blair Towns 7/6/2011 0:00 Silver Spring Existing Buildings v2009 Platinum PNC Bank Branch- Germantown 6/11/2009 0:00 Germantown New Construction v2.2 Silver Herb Gordon Mercedes-Benz 12/21/2011 0:00 Silver Spring New Construction v2009 Certified One Main Financial, Rockville MD 4/13/2009 0:00 Rockville Retail - Commercial Interiors vl.0 pilot Certified Redland Center Ill 1/18/2010 0:00 Rockville Core and Shell v2.0 Gold

16 Redland Center II 1/18/2010 0:00 Rockville Core and Shell v2.0 Gold Washingtonian Center South 9/7/2010 0:00 Gaithersburg Core and Shell v2.0 Gold Shady Grove Educational Center Ill 10/23/2007 0:00 Rockville New Construction v2.0 Gold 2000 Tower Oaks Boulevard 4/24/2009 0:00 Rockville Core and Shell v2.0 Platinum P 701/796-WTU-Bldg 17 7/9/2012 0:00 Bethesda New Construction v2.2 Silver Farmland Elementary - Addition 7/2/2012 0:00 Rockville Schools - New Construction v2007 Gold McCarthy Wilson 10/26/2009 0:00 Rockville Commercial Interiors v2.0 Gold Montgomery College Science Center 8/23/2012 0:00 Rockville New Construction v2.2 Gold Gaithersburg Olde Towne Youth Center 6/17/2010 0:00 Gaithersburg New Construction v2.2 Platinum Blair Towns 1/21/2004 0:00 Silver Spring New Construction v2.0 Certified Ruppert landscape Shop Building 5/31/2012 0:00 Laytonsville New Construction v2.2 Gold P-188/189 RDT&E Support Facility 10/4/2012 0:00 Bethesda New Construction v2.2 Gold CVS Pharmacy /18/2011 0:00 Burtonsville New Construction v2.2 Certified 1200 East-West Highway 5/17/2012 0:00 Silver Spring New Construction v2.2 Gold P701-WTU-Bldg 62 4/18/2012 0:00 Bethesda New Construction v2.2 Silver Montrose Crossing 4/27/2012 0:00 Rockville Core and Shell v2009 Certified Giant Burtonsville 9/5/2012 0:00 Burtonsville Retail - New Construction vl.0 pilot

17 Sesker, Jacob From: Sent: To: Subject: Attachments: Steve Silverman Monday, September 11, :58 AM Sesker, Jacob LEED Tax Credit MoCo Surrounding Jurisdictions - High Performance Building Tax Credits.pdf; A TT00001.txt Jacob, I represent Lennar in connection with a request to revise the existing Tax Credit program to include a tax credit for LEED Gold residential projects as other Maryland counties have done. Please find attached a summary of those programs and a potential Montgomery County approach. I will attend the worksession on Sept. 14 and look foiward to a discussion of this option. Please call if you have questions. Thanks Steve 1

18 MoCo Surrounding Jurisdictions - High Performance Building Tax Credits ANNE ARUNDEL COUNTY Anne Arundel offers High Performance Dwelling Property Tax Credits to commercial, residential, and multi-family residential properties. Tax credits claimed under this program are administered by Anne Arundel County Office of Finance. Certification types offered for single-family residential: CERTIFICATION TYPE REBATE AMOUNT (as a percentage of TERM the County property taxes owed on the dwelling) LEED for Homes Platinum 80"/4 of taxes owed up to $3,000 5 years LEED for Homes Gold 60% of taxes owed up to $2,000 5 years LEED for Homes Silver 40% of taxes owed up to $1,000 5 years BALTIMORE COUNTY Bait. Co offers Tax Credits for High Performance Buildings to commercial, residential, and multifamily residential properties. Tax credits claimed under this program are administered by Bait. Co Office of Budget and Finance. To qualify, a building must achieve a LEED rating of Silver or greater. The credit applies only to Baltimore County Real Property Tax obligations. Certification types offered for single-family residential: CERTIFICATION TYPE PROPERTY TAX CREDIT (as a TERM percentage of the total property tax assessed) LEED for Homes Platinum 100% 3 years LEED for Homes Gold 60% 3 years LEED for Homes Silver 40% 3 years Maximum rebate - NO LIMIT, just cannot exceed the total property tax assessed. No tax home builder incentives or tax credits available for single family residential home builders. HOWARD COUNTY HoCo offers High Performance and Green Building Property Tax Credits for High Performance Buildings to commercial, residential, and multifamily residential properties. Tax credits claimed under this program are administered by HoCo Department of Finance. The 'AMOUNT' section below represents the County tax that goes toward building assessments. 1

19 Certification types offered for single-family residential property: CERTIFICATION TYPE AMOUNT TERM LEED for Homes Platinum Yl: 100%; Y2: 75%; Y3: 50%; Y4: 25% 4years LEED for Homes Gold Yl: 90%; Y2: 68%; Y3: 45%; Y4: 23% 4 years LEED for Homes Silver Yl: 75%; Y2: 56%; Y3: 38%; Y4: 19% 4 years Maximum rebate -$5,000 per building or owner-occupied unit per fiscal year. No home builder incentives or tax credits available for single family residential. Staff did mention they offer credits for new commercial/industrial construction. MONTGOMERY COUNTY MoCo offers a High performance building property tax credit to ONLY commercial and multi-family apartment properties. Tax credits claimed under this program are administered by MoCo Department of Finance. There is a cap on overall credits awarded per fiscal year of $5 million - $2.5 million cap on LEED Gold and $1.5 million cap on LEED Silver. In FY 2016, the program utilized the following funds: Silver - $0, Gold - $2,500,000, Platinum - $890, Potential LEED for Homes c~rtification types for MoCo - 60% for Gold, 80% for Platinum over 5 years CERTIFICATION TYPE REBATE AMOUNT (as a percentage of TERM the County property taxes owed on the dwelling) LEED for Homes Platinum 80% of taxes owed up to $5,000 5 years LEED for Homes Gold 60% of taxes owed up to $3,000 5 years LEED for Homes Silver N/A N/A LEED FOR HOMES GOLD TAX CREDITS AT $500,000 ASSESSED VALUE PER UNIT JURISDICTION PROPERTY AMOUNT OF CREDIT AVAILABLE PER YEAR ($} AGGREGATE TAX RATE (CALCULATED USING RATES IN ABOVE TABLES} BENEFITS TO (%) HOME OWNER ($) Anne Arundel.91 2,000 10,000 over 5 years Baltimore Co ,300 9,900 over 3 years Howard 1.01 Yl: 4,545; Y2: 3434; Y3: 2,272.5; Y4: ,413 over 4 years Montgomery , ,481 over 5 years At the proposed level of MoCo credits displayed above, 218 units that qualify for LEED for Homes Gold would cost $631, per fiscal year. No one is currently achieving LEED for Homes Platinum. 2

20 ,.} Sec Property tax credit - energy and environmental design. (a) Definitions. In this Section the following words have the meanings indicated: (I) "Covered building" has the meaning stated in Section (2) "High performance building" means: (A) A covered building that achieves: or (1) A gold or platinum rating from the USGBC for LEED-NC, LEED-CS, or LEED-EB; (2) An energy and environmental design standard that the Director of the Department of Permitting Services finds is equivalent to a gold or platinum rating from the USGBC for LEED NC, LEED- CS, or LEED-EB; and (B) Any other building that achieves: (1) A silver, gold, or platinum rating from the USGBC for LEED- NC, LEED-CS, or LEED-EB; or (2) An energy and environmental design standard that the Director of the Department of Permitting Services finds is equivalent to the silver, gold or platinum rating from the USGBC for LEED- NC, LEED-CS, or LEED-EB. (3) "LEED-CS'; means the Leadership in Energy and Environmental Design - Core and Shell rating system administered by the USGBC. (4) "LEED-EB" means the Leadership in Energy and Environmental Design -Existing Building rating system administered by the USGBC. (5) "LEED-NC" means the Leadership in Energy and Environmental Design - New Construction rating system administered by the USGBC. (6) "Property tax" means the general County tax and all special service area taxes. (7) "USG BC" means the US Green Building Council. (b) Credit. Subject to the restrictions in subsections ( c ), ( d), and ( e ), the Director of the Department of Finance must allow a tax credit each eligible year against the property tax imposed on a high performance building. ( c) Application. A taxpayer must apply for the credit within I year after the building is certified as a high performance building. (d) Amount of credit. (1) For a covered building, the amount of the credit is: (A) 25% of the property tax owed on the building for 5 years, if the building achieves a gold rating for LEED-NC or LEED-CS or an equivalent standards; (B) 75% of the property tax owed on the building for 5 years, if the building achieves a platinum rating for LEED-NC or LEED-CS or an equivalent

21 (C) I 0% of the property tax owed on the building for 3 years, if the building achieves the gold rating for LEED-EB or an equivalent standard; or (D) 50% of the property tax owed on the building for 3 years, if the building achieves the platinum rating for LEED-EB or an equivalent standard. (2) For any other building, the amount of the credit is: (A) 25% of the property tax owed on the building for 5 years, if the building achieves a silver rating for LEED-NC or LEED-CS or an equivalent standard; (B) 50% of the property tax owed on the building for 5 years, if the building achieves a gold rating for LEED-NC or LEED-CS or an equivalent standard; (C) 75% of the property tax owed on the building for 5 years, if the building achieves a platinum rating for LEED-NC or LEED-CS or an equivalent standard; (D) 10% of the property tax owed on the building for 3 years, if the building achieves the silver rating for LEED-EB or an equivalent standard; (E) 25% of the property tax owed on the building for 3 years, if the building achieves the gold rating for LEED-EB or an equivalent standard; and (F) 50% of the property tax owed on the building for 3 years, if the building achieves the platinum rating for LEED-EB or an equivalent standard. (e) Annual limits. (1) Subject to the annual limits in paragraph (2) and the carryover rules in paragraph (3), the Director must grant credits in the order in which the Department of Finance receives complete applications. (2) During any fiscal year the total credits granted to: (A) All buildings under this Section must not exceed $5 million. (B) Buildings that achieve a silver rating or equivalent standard must not exceed $1.5 million; and (C) Buildings that achieve a gold rating or equivalent standard must not exceed $2.5 million. (3) A complete application that, if granted, would cause any of the limits set in paragraph (2) to be exceeded, must be granted in the next fiscal year or years based on the order in which the Department of Finance received the application. (f) Regulations. The County Executive may issue regulations under method (2) to administer this tax credit. (2007 L.M.C., ch. 20, 1; 2010 L.M.C., ch. 49, l; 2016 L.M.C.. ch. 7, 2.) Editor's note-2007 L.M.C., ch. 20, 2, states: Applicability. Section 52-18Q, as added by Section 2 of this Act, applies to any building which is certified as a high perfonnance building after the Act takes effect [Effective Date: March 17,