Attainable Green Building Tools

Residential Financing Tools Help Support USGBC’s Mission of ‘LEED for All’

By ALYSSON BLACKWELDER

The U.S. Green Building Council remains committed to transforming the buildings, cities, and communities where people live and work into places that are healthier, more efficient, and more resilient than the status quo. For USGBC, a LEED home is just that. Both LEED single family homes and multifamily buildings are built to positively affect the health and wellbeing of their residents, make efficient use of resources, and save money.

On average, LEED-certified homes use 20 to 30 percent less energy than a traditional home, with some residents reporting savings of up to 60 percent. For homeowners, a LEED certification also means the promise that their home will be valued at a higher rate than that of a conventional home. And for builders and developers, with LEED comes the assurance that a home has been third-party inspected and verified to high levels of sustainability performance – a standard that translates into increased value. For example, a 2017 study by the University of Texas at Austin reported that new, green homes in the Austin metropolitan area are worth more than $25,000 in resale value on average than conventional homes.

A home is the most important building in one’s life – so why shouldn’t it be a LEED home? According to our LEED in Motion: Residential report released in 2019, LEED certified homes continue to gain popularity in the market. In fact, the number of LEED certifications have increased by 19 percent since 2017, representing an all-time high. Now there are nearly 530,000 residential units having been certified LEED, with 400,000 of those located in the U.S. Federal incentives support market progress While market forces have largely driven this growth, financial tools can support developers, builders, and prospective homeowners in their pursuit of LEED certification. Federally sourced incentives offered by the housing financing industry offer discounted financing solutions for green multifamily projects.

Fannie Mae’s Multifamily Green Rewards program provides owners of LEED – or otherwise green – certified properties with a lower interest rate, a free energy and water audit report, and up to five percent additional loan proceeds. Borrowers must commit to a minimum 30 percent reduction of annual energy or water usage, along with submission of an annual ENERGY STAR Portfolio Manager report to qualify.

In 2015, the Esplanade apartment building in Maryland earned LEED certification after qualifying for Fannie’s Green Rewards program. Co-developed by Peterson Companies and Bozzuto Development Company, this mixed- use project of 262 residential units was the first rental community at the National Harbor com- munity development, outside of Washington, D.C. Esplanade residents enjoy a high walkability factor, along with energy efficient appliances and ample daylighting.

The U.S. Department of Housing and Urban Development (HUD) offers LEED-certified properties reduced mortgage insurance premi- ums (MIPs) for Federal Housing Administration (FHA) Multifamily mortgage insurance programs. Properties that earn LEED certification and have qualifying multifamily FHA-insured loans can benefit from reduced upfront and annual MIP rates.

Green financing incentives help bring the benefits of LEED certification within reach to a larger number of residents and property owners than would not be possible otherwise. For more on LEED and green building multifamily financing incentives, USGBC developed a policy brief to help builders and developers navigate the options.

For developers and homebuilders, the New and Efficient Homes Credit, or 45(L) federal tax credit, offers $2,000 per dwelling unit to developments with energy consumption levels 50 percent lower than national energy standards.

A $1,000 tax credit is available to builders of new manufactured homes achieving 30 percent energy savings or upon meeting ENERGY STAR efficiency requirements. To qualify, a residential dwelling unit should provide a detailed energy analysis certified by a third party.

State financial mechanisms boost LEED’s appeal Nevada demonstrates a prime example of an incentive offered on the state level for projects meeting certain green building standards. The state’s green building tax abatement program, administered by the Nevada Governor’s Office of Energy, provides a partial property tax abatement for new and existing multifamily residential and non-residential green buildings. Existing buildings are capped at an amount of $100,000 per year, and for a period of five years.

One Queensridge Place is another residential project taking advantage of the state abatement, earning LEED Gold for operations and maintenance in 2014. Originally built in 2006, this high-rise condo building achieved LEED status after comprehensive analysis of the complex’s energy consumption. Improvements to the project’s efficiency placed it within the top 14 percent of comparable energy efficient buildings, thus granting the project a 30 percent tax incentive for ten years.

‘LEED for All’ in 2020 and beyond
Whether its apartments, high-rise condos, or single-family homes, USGBC is encouraged by the robust growth of LEED demonstrated in the residential market, supported by these valuable financing incentives. With a vision of green build- ings for all, the organization is continuing to work closely with builders and developers across the residential sector to create homes that are more resilient, help mitigate the effects of climate change and can bridge the equity gap.

Alysson Blackwelder is an Advocacy and Policy Project Manager for the U.S. Green Building Council.  She can be reached at ablackwelder@usgbc.org