Cincinnati's LEED Property Tax Abatement: How? Why? Results?"

CincinnatiUSA

2012 ANNUA2

Cincinnati’s LEED Tax Abatement Success

The story of how a small mid-western city is well on its way to having more LEED buildings per capita than anywhere in the world!

Chuck Lohre, President, Green Cincinnati Education Advocacy

Chuck Lohre is the second-generation leader of Lohre & Associates, a Cincinnati-based marketing communications agency with deep roots in the construction industry. Chuck created Green Cincinnati, a division of Lohre & Associates to advocate for sustainable efforts and to educate the public about all aspects of green building.

Since then, Chuck planned a new office which received LEED Platinum, and registered his own residence as a LEED project. He also started a green newsletter with thousands of subscribers and continues to lead numerous tours of green buildings open to professionals and the general public.

In the Queen City of the West, Chuck has come to be known as Mr. Green Cincinnati and is frequently asked to speak at events, contribute articles and comment on green efforts in the area for a variety of media. Chuck is an active member of the Cincinnati chapter of the USGBC and is on the Advisory Committee of the Civic Garden Center of Greater Cincinnati’s Green Learning Station.

Chuck Lohre <chuck.lohre@green-cincinnati.com>

Laure Quinlivan, City of Cincinnati Council Member

Laure Quinlivan is in her second term on Cincinnati City Council and Chairs the Strategic Growth Committee which oversees economic development, and environmental issues.

She spearheaded improvements this year to Cincinnati's LEED ordinance, which rewards citizens and companies who build LEED certified energy efficient buildings with a 15 year property tax abatement.

Quinlivan's work on council includes helping neighborhoods revitalize through Community Entertainment District designations that attract new restaurants.

She also created Mobile Food Vending and Mobile Produce Vending in Cincinnati and led the effort to create a new Business Retention Program for the City.

Peabody Award-winning journalist who has also won 18 Emmys for her investigative reporting work for television stations.

Laure Quinlivan <laure.quinlivan@cincinnati-oh.gov>

Paul Yankie is the Chief Financial Officer of Green Building Consulting

A provider of certification, technical assistance, consulting and education on environmentally sustainable building and community design, building science, and energy efficiency.

Green Building Consulting has certified nearly 200 projects across the south, mid-west and east coast regions with Paul personally acting as QAD on more than half of them.

Paul holds leadership roles in the following organizations within the Greater Cincinnati area: Chairperson of the Residential Green Buildings Member Circle of the USGBC Cincinnati Chapter, Liaison to USGBC National for their “Green the MLS” and “Value Healthy and Efficient Affordable Housing” Advocacy Campaigns.

Current and past professional designations include: LEED AP Homes, LEED for Homes Green Rater, LEED for Homes Provider QAD, Securities Licenses – Series 7, Series 63, Series 65, Series 24 and Life and Health Insurance License for the states of OH and KY.

Paul Yankie <pyankie@greenbldgconsulting.com>

Learning Objectives

1. What is Cincinnati doing and how did we get here?

2. How do you pick a Green Building standard?3. How do you implement a Green Building

incentive program?4. What are the benefits of a tax abatement?5. Lessons Learned, Best Practices, Takeaways?

In 2001 University of Cincinnati commits to all construction to be LEED Certified

2006 Schools Lead the Way

Schools Lead the Way

Schools Lead the Way

Schools Lead the Way

Laure Quinlivan, City of Cincinnati Council Member

Laure Quinlivan is in her second term on Cincinnati City Council and Chairs the Strategic Growth Committee which oversees economic development, and environmental issues.

She spearheaded improvements this year to Cincinnati's LEED ordinance, which rewards citizens and companies who build LEED certified energy efficient buildings with a 15 year property tax abatement.

Quinlivan's work on council includes helping neighborhoods revitalize through Community Entertainment District designations that attract new restaurants.

She also created Mobile Food Vending and Mobile Produce Vending in Cincinnati and led the effort to create a new Business Retention Program for the City.

Peabody Award-winning journalist who has also won 18 Emmys for her investigative reporting work for television stations.

Laure Quinlivan <laure.quinlivan@cincinnati-oh.gov>

2007 Cincinnati

Passes LEED

Ordinance

Spark for LEED program

Local USGBC met with City Administration in 2006 to brainstorm green building incentives.

City issue – no budget and no staff to manage a new program.

Solution – tax abatement for LEED

Why a Tax Abatement?

• No city staff or funds required• LEED-CRA is easy adaptation of

Ohio’s Community Reinvestment Act (CRA) legislation

• City already had 10 year abatement for new construction, to $275,000

• LEED abatement is 15 years for new construction and up to 12 renovation

Cincinnati’s LEED Residential Property Tax

Break

• Up to $562,000 abated for 15 years for LEED, Silver, or Gold.• No $ limit on abatement for 15 years for LEED Platinum

Cincinnati’s LEED Commercial Property Tax

Break

• New Construction: 75% Abatement of improved value up to 15 Years, No Cap• Renovations: 75% Abatement of improved value up to 12 Years, No Cap

Property Tax Incentives for Energy Efficiency

State Description Abatement DurationMaximum Abatement

Maryland

Anne Arundel County - High Performance Dwelling Property Tax Credit

80% 5 years $3000/year

Baltimore County - Property Tax Credit for High Performance Buildings and Homes

100% 5 years$1000000/

year

Howard County - High Performance and Green Building Property Tax Credit

50% 4 years -

Local Option - Property Tax Credit for High Performance Buildings

N/A - -

Montgomery County - High Performance Building Property Tax Credit

75% 5 years -

Nevada Property Tax Abatement for Green Buildings 35% 10 years -

New York Local Option - Real Property Tax Exemption for Green Buildings 75% 10 years -

Ohio

City of Cincinnati - Property Tax Abatement for Green Buildings

100% 15 years Unlimited

City of Cleveland - Residential Property Tax Abatement for Green Buildings

100% 15 years Unlimited

VirginiaLocal Option - Property Tax Assessment for Energy Efficient

Buildings- 5 years -

Cincinnati

Tax Break

Largest &Longest

LEED Tax Abatement Benefits

• Owners pay no taxes on improvement value of property for up to fifteen years.

• Tax abatement remains with property and transfers to a new property owner.

• LEED homes are healthier, utilities lower

LEED Builder John Hueber

Quinlivan home – LEED revitalizes older established

neighborhoods

Before and After >

Video: http://www.LQReportingtoYou.com or http://youtu.be/aXAa6QiLqNE

“This year (2011), there’s a new show in town expected to draw a younger, more urban demographic”

LEED Highlights:Cincinnati has over 80% of all LEED projects in

Ohio.

Total LEED Homes & Condos: 16766 Certified, 76 Silver,

19 Gold, 6 Platinum

Construction Type: 140 New Construction, 27 Rehab

LEED Highlights:Cincinnati has over 80% of all LEED projects in

Ohio.

Total LEED Commercial: 17 (519 units)3 Certified, 8 Silver,

6 Gold, 0 Platinum

Construction Type: 9 Multi-Unit Apartments (519 units), 8 Rehab

Go for GOLD! January 2013 changes to LEED program

Go Higher, Save More!

Paul Yankie is the Chief Financial Officer of Green Building Consulting

A provider of certification, technical assistance, consulting and education on environmentally sustainable building and community design, building science, and energy efficiency.

Green Building Consulting has certified nearly 200 projects across the south, mid-west and east coast regions with Paul personally acting as QAD on more than half of them.

Paul holds leadership roles in the following organizations within the Greater Cincinnati area: Chairperson of the Residential Green Buildings Member Circle of the USGBC Cincinnati Chapter, Liaison to USGBC National for their “Green the MLS” and “Value Healthy and Efficient Affordable Housing” Advocacy Campaigns.

Current and past professional designations include: LEED AP Homes, LEED for Homes Green Rater, LEED for Homes Provider QAD, Securities Licenses – Series 7, Series 63, Series 65, Series 24 and Life and Health Insurance License for the states of OH and KY.

Paul Yankie <pyankie@greenbldgconsulting.com>

2012 ANNUA33

How Do You Implement a Green Building Incentive Program?

Approval Process

Approval Process

•Residential• 1 Application, 1 Certificate, Automatic Approval

•Commercial• The City approves application for documentation and work completion• The City analyzes the project financials, many times in conjunction with the NDC (Neighborhood Development Corporations), to determine whether the project demonstrates a “need” for the tax exemption. This step is skipped if LEED

PromoteWell

&Promote

Often

2012 ANNUA37

How Do You Pick a Green Building Standard?

Why Did Cincinnati Pick LEED?

• Because of who runs it: US Green Building Council– Non-Governmental Agency– Non-Profit– Consensus Based Decisions– Great Brand Recognition– Voluntary Program– Tiered Program

Why Did Great American Pick LEED?

• Higher occupancy rates

• Higher resale value

• Because of the Well Documented Outcomes from LEED Certified Buildings– Reduction of Operating Costs– Energy Savings– Water Savings– Improved Occupant Health and Comfort– Increased Occupant Productivity– Reduction of Potential Liability– Enhanced Building Marketability

Why Did Cincinnati Pick LEED?

2012 ANNUA43

What are the benefits of a Tax Abatement?

The Benefits to the Municipality

• Community Quality of Life– Reduce the impacts of natural resource

consumption– Enhance residents comfort and health– Perception of being a forward thinking

community and thus attracting a forward thinking resident (young professionals, innovators, etc.)

– Better Schools?

• Infrastructure– Minimize Strain on Local Infrastructure by

Shrinking Water, Sewer and Energy Use– More Mileage Out of Your Infrastructure

• Cincinnati Metropolitan Sewer District

The Benefits to the Municipality

• Economic Benefits– Increased Property Tax Collection – NOW &

LATER– Increased Income Tax Collection– Increase in Local Spending – Job Creation– Better Buildings = Better Tenants = Increased

Rents / Purchase Price = Increased Property Valuation = Increased Tax Collection = ???

The Benefits to the Municipality

Residential Tax Abatement Math

• Example 1 – New Construction Single Family Home (Quinlivan Residence)– $415,640 Market Total Value (including land)– $118,970 Market Land Value– $296,670 Improved Value– House achieves LEED Gold and qualifies for 100% of Improved

Value up to $564,000– Annual Tax Savings - $296,670 (improved value) x 2.187% (tax

rate) = $6,488/year– Total Tax Savings over the 15 year abatement - $6,488 x 15 = $97,320

– Total Tax Savings for Non-LEED Abatement for same house = $60,142+

Moerlein Lager House Saved $553,575

Commercial Tax Abatement Math

• Example 2 – New Construction Commercial Structure (Moerlein Lager House)– $3,000,000 Total Market Value (including land)– $750,000 Lot Value– $2,250,000 Improved Value– Building Achieves LEED Silver Certification thus having an

abatement of 75% of Improved Value of $2,250,000– Annual Tax Savings - $2,250,000 x 75% x 2.187% = $36,905– Total Tax Savings 15 year abatement - $36,905 x 15 =

$553,575

– Without Cincinnati LEED tax abatement: $0 (might be able to negotiate an abatement)

What will critics say?

• “No one will use it”

• “The development was going to happen anyway”

• “You’re giving away money”

Cincinnati's LEED Tax Abatement Driving Growth, Fox 19 News7-11-13

YouTubehttp://youtu.be/fjDc0vk-bh0

Lessons Learned, Best Practices, Takeaways

1. Urban revitalization is the benefit of tax abatements.2. USGBC’s LEED Certification program adapts quickly to advanced standards and is the lowest cost to administer.3. LEED Green Building programs are accepted by legislators globally, nationally, state and city wide.4. Use the media, builders and residents to promote your sustainable building program.5. Sustainable cities preserve natural resources for future generations.

CincinnatiUSA

Residential Abatement

Commercial Abatement

Renovation New Construction

   Residential (4 or more units)

 Commercial / Industrial / Mixed-Use

Residential (4 or more units)

Commercial / Industrial / Mixed-Use

Non-LEED  up to 8 years up to 12 years up to 8 years up to 15 yearsLEED Certified up to 8 years up to 12 years up to 8 years up to 15 yearsLEED Silver 12 years 12 years 15 years 15 yearsLEED Gold 12 years 12 years 15 years 15 years

LEED Platinum 12 years 12 years 15 years 15 years

Council Member Laure Quinlivan, green building consultant Paul Yankie and green education advocate Chuck Lohre presented on Cincinnati’s success building LEED at a conference in Chicago on September 9, 2013. The U.S. Green Building Council's regional Greening the Heartland conference and exhibition in Chicago featured the presentation "Cincinnati's LEED Property Tax Abatement: How? Why? Results?"  The three green activists shared the secret to Cincinnati’s success as the city with more LEED certified buildings per capita than any in the region. The secret is the smart 15-year LEED property tax abatement that Cincinnati Council passed in 2007 and tweaked in 2012, sparking the rehabilitation or construction of 184 LEED-certified buildings. Cincinnati has a total of more than 500 LEED certified residential units. The LEED levels of the City of Cincinnati’s 184 green buildings are:Platinum – 6Gold – 25Silver – 84Certified – 69

Cincinnatians Share City’s Green Success in Chicago

Council Member Laure Quinlivan built a LEED Gold home in 2011. In 2012, she authored a change to the city’s tax abatement to incentivize higher levels of green building. Chuck Lohre’s office is LEED Platinum. Cincinnati’s program is one of the most progressive in the nation and is responsible for millions of dollars in residential and commercial investment during the recession that would otherwise not have occurred. Commercial buildings receive a 12-year, 75% property tax abatement for LEED Silver, Gold, or Platinum certifications. Videos in the presentation illustrate how residential and commercial projects were built in Cincinnati versus other communities, and the benefits to the city including increased property taxes on the land, construction jobs, construction material sales, income tax generating residents, commercial jobs and revitalized neighborhoods. Another video documents the construction of Quinlivan’s LEED Gold home and the elements that make it “green”, at http://lqreportingtoyou.com/index.php?page=videos&vid=73. Laure Quinlivan, Paul Yankie and Chuck Lohre will give the presentation again at Cincinnati’s 3E Summit, http://www.3esummitcincinnati.org/, Nov 22, 2013 at Xavier University’s Cintas Center. It is also available in long, http://www.slideshare.net/ChuckLohre/cincinnati-leed-presentation-9-2813/, or short versions for Cincinnati community council and other civic meetings, professional association events and municipalities.  Contact Chuck Lohre, 513-260-9025, chuck@lohre.com.

Cincinnatians Share City’s Green Success in Chicago