New Green Building Incentives: Working Together for Energy Efficiency

In 2018, Montgomery County DEP led a group of stakeholders to review the County’s green building property tax credit for commercial and multifamily buildings. The credit had been in place since 2006 and incentivized green building certifications similar to the LEED rating system. The stakeholder workgroup produced a report recommending updates and improvements, which were eventually crafted into Bill 10-20, signed into law by County Executive Marc Elrich in September 2020.

The new green building incentive program pioneers an innovative two-tiered structure for newly constructed buildings and existing buildings. It includes new incentives for energy efficiency improvements beyond the current building codes and adds bonus incentives for a variety of green building certifications such as LEED, PassiveHouse, BREEAM, and Living Building Challenge.

The workgroup was comprised of representatives from the private building industry, climate advocates, green building industry organizations, utilities, consultants, and County and City governments. When developing the new incentive recommendations, the stakeholders agreed that the incentive program should directly support the County’s climate change goals to eliminate greenhouse gas emissions entirely by 2035. DEP greatly appreciates the stakeholder workgroup members’ time, effort, and expertise on crafting this groundbreaking new program!

Jonathan Bauer, Sustainability Manager at The Tower Companies

We asked Jonathan Bauer, Sustainability Manager at The Tower Companies and member of the stakeholder working group, to reflect on his participation in the workgroup, the impact of the tax credit program on upcoming projects, and his thoughts on the County’s climate goals.

Why did you get involved in the stakeholder workgroup?

The Tower Companies experienced the value of the previous green building tax credit program firsthand. We applied for the tax credit at 8 of our buildings starting in 2009. And our most recent development, The Pearl, is currently receiving tax credits from the program by achieving LEED Gold in 2017. The incentive program pushed us to go further in our sustainability efforts and we wanted to help improve the program and make it more accessible for the broader real estate community in Montgomery County.

Additionally, one of the pillars of our sustainability program is Leadership & Partnerships. This is how we demonstrate sustainability leadership, but also how we give back to the community and share leading solutions. Climate change is a global issue, and we want to make an impact outside of our own operations. Serving on the stakeholder working group allowed us to participate in a process that could help the broader industry. As a frequent user of the previous program, we knew there were ways to improve the program to increase its impact.

How will the new Green Building Incentive program improve how The Tower Companies makes sustainability decisions in new/existing buildings?

Prioritizing energy performance first will drive a lot of change. This looks different for new construction and existing buildings. For new construction, the program will support all new construction looking to push the boundaries. By eliminating the program’s financial cap, the County is making a statement that they want all new construction to move towards net zero energy now. It will radically change the conversation for developers during the design process. It will push us to be more aggressive in our energy models.

At the same time, we must focus on existing buildings to have any chance at mitigating climate change, especially since existing buildings make up more than half of the County’s GHG emissions. We have known this for a long time. Tower has already reduced GHG emission by more than 40% since 2010. Going further requires significant investment in new technologies. The tax credit program supports buildings in all stages of the sustainability journey. All energy efficiency projects should now take a close look at how much they can improve ENERGY STAR scores to align with the incentive. This will change our project evaluation process and make higher cost and higher impact solutions more likely. It will also push us towards higher levels of LEED certification. Most of our portfolio is LEED Gold currently, it would be nice to see more of our portfolio reach LEED Platinum or other green building labels, and this program will incentivize us to go there.

Can you cite an example of a project that has changed for the better based on this incentive program?

We recently started our first smart building technology pilot at one of our assets in DC. We partnered with Prescriptive Data to launch Nantum OS. We are targeting a 7-10% energy reduction in an already efficient building (ENERGY STAR score of 81). Because of the tax credit program, we are starting to look at bringing the solution to our buildings in Montgomery County. Without the tax credit program, we likely would have kept our focus on DC assets and would have moved slower. The tax credit program will help us make the business case to expand smart building technology across our portfolio, with a focus in Montgomery County.

Why is engaging the private sector key to the County’s success in meeting its climate goals?

Private sector engagement is key to the County meeting its climate goals. Public-private partnerships have a lot of power. This tax credit program is just one example. But to scale these programs, constant engagement is needed. There are segments of the market that are marginalized. There is an incredible amount of energy waste hiding in those buildings. Engagement raises the tide for all.

Any final thoughts on the working group process and Bill 10-20?

I would like to congratulate the County for unanimously passing Bill 10-20. This is a critical step toward achieving Montgomery County’s climate goals. Your leadership has helped produce one of the most impressive green building incentive programs nationwide. The Green Building Tax Credit program will certainly yield higher performing buildings that emit less carbon, benefit the economy, and inspire other jurisdictions to act on climate change.