Green Means

Green Codes, Not Tax Incentives

By Shannon Scott

           

            In 2005 Nevada State Legislature passed a green building incentive program to encourage healthier private developments, or so it seemed.  Developers could receive up to $3 for every $1 spent meeting LEED requirements.  

            The 2005 Legislation, AB 3, required the state to construct two LEED Silver or higher certification structures during each two year budget cycle.  Simultaneously, it provided sales tax reductions of 2% for all construction materials and a 50% property tax reduction for ten years to the owners of privately constructed buildings.  Referred to as “The Nevada Experience” it yielded a national example of how not to structure green building legislation.  

            Initially, losses projected to exceed $940 million over the 2005-2007 biennium.  This poorly researched legislation created a financial crisis, forcing the next legislative session in 2007 to reexamine and modify the program.

            “The Nevada Experience” typifies corporate influence on legislation.  Rent-seeking, common at the federal level where more money can be had, proves akin to  run-away inflation.  Nationally, G.E. is a major recipient.  In Nevada, MGM-Mirage’s Project City Center will likely receive $900 million over its life due to AB 3.

            In 2007, the Nevada Legislature voted to repeal AB 3, but not without grandfathering in six projects under the 2005 legislation.  These modifications reduced projected state losses from the $940 million to $493 million. 

            Green developments save corporations billions over decades via reduced energy costs, increased employee productivity, and greater real estate asset values.  Green is smart business.  Around the globe, corporations and developers, large and small, understand this.  It’s not like multinational corporations and other businesses all of a sudden got a social and environmental conscience.  Accounting teams compared and studied the bottom line – green development methods beat traditional construction and building operations hands down.  Everyone smiles on their way to the investment company.

             As of February 2011, Nevada legislation, AB 202, allowed for partial property tax abatements for certain manufacturing businesses when buildings are LEED Silver Certified.  Obviously, this bill is too limited and rewards likely one particular company’s piece of real estate.   AB 202 does nothing on a broad scale to establish energy savings awareness, healthier indoor environments, or resource preservation.  The manufacturing business, already poised to save huge due its green building measures, will now benefit even more at public expense.

            Legislators must stop giving tax breaks to companies already profiting from going green via reduced energy costs, increased real estate asset values, and improved employee productivity.   Individuals and companies can receive federal tax breaks simply by installing green, energy saving alternatives during construction.  They don’t need hard working Nevadan’s tax revenues. 

            The International Code Council developed the International Green Construction Code (IgCC).  The IgCC includes sustainability measures for the totality of the construction process – site consideration, design, construction, and ongoing operations.  The code makes buildings more efficient, reduces waste, and impacts health, safety, and community well being.  Legislatively, adopting the IgCC proves the best option to ensure a sounder economic future for Nevada, without tax payers subsidizing industry.

            The IgCC is flexible.  Jurisdictions can adopt the codes at several levels of compliance, from core provisions to higher building performance electives.  It is also easily enforceable, reviewed and often quickly adopted by expert inspectors who needed safe construction coupled with sustainability.  A 29-member committee, taking input from more than 100 experts in government, business, academia, and environmental health developed the IgCC over the better part of a year. 

            Adopting IgCC avoids legislating LEED Certifications, avoids property tax abatements, and offers up tax payer friendly solutions to energy and resource savings. 

            Adopting IgCC would mean home buyers in Elko County and across Nevada could be assured of buying or building newly constructed homes with low utility costs, safer indoor environments, and constructed from responsibly harvested and manufactured products – without having to take the contractor’s or developer’s word for it. 

            Building codes mandate safety and sanitation.  Over decades, science and research has informed code adoptions for public good.  With soaring energy costs, a more fragile environment, and human health problems increasing, let’s adopt new and additional codes, not tax incentives.