Viewpoint: Five ways to build green communities on a limited budget
To encourage the expansion of green communities, cities and counties are offering a wide variety of incentives to developers to support sustainable design and construction. Many local officials think that direct monetary incentives — such as permit fee credits, tax credits, development fee reductions, rebates and direct grants — are required to encourage developers to construct sustainable projects, but non-economic incentives can be as motivating as economic incentives, if not more so. Given the financial challenges and budget cutbacks that local governments are facing, broadening the types of development incentives for sustainable construction to include more non-economic incentives can be a practical way to encourage green communities to grow.
The following five non-monetary incentives are just some of the ways cities and counties have developed to encourage the construction of sustainable projects.
1. Density bonuses. Density bonuses allow developers to build projects with higher floor area ratios or other density measures if they satisfy specified green standards, such as the U.S. Green Building Council’s (USGBC) point-based Leadership in Energy and Environmental Design (LEED) standards. Higher permitted density increases a project’s value based on the additional units or space that may be rented or sold, which helps offset the initial costs associated with green construction. Portland, Ore.; Seattle and Pittsburgh offer density bonuses for qualifying green projects.
2. Expedited permitting processes. The time involved in obtaining permit approvals can cause delays that result in substantial costs to developers. Offering expedited permitting for sustainable projects by giving preference to projects that satisfy specified green criteria can be a great incentive to developers. Reducing the time to obtain approvals results in paying less interest on construction loans and allows the property to produce income earlier. This is one of the most popular non-monetary incentives offered by cities and counties to promote green building. San Francisco, Seattle and Chicago are just a few of the cities that offer expedited permitting for projects that incorporate green building elements.
3. Publicity and marketing. Some cities — such as Oakland, Calif., and Scottsdale, Ariz. — promote green buildings in city-sponsored marketing programs. That can include giving exposure of the project and its developer on the city’s website, providing special recognition of the project’s green features, and including information about the project in press releases.
4. Technical support and education. Technical support can be another non-monetary incentive for green development. Cities and counties can offer information and guidance on design, material selection and sustainable building methods. The support can come from the city staff’s green building expertise, or from organizations that promote sustainable development, such as USGBC, in the form of written materials, website or video tutorials, live training workshops and staff guidance. Oakland, Calif.; Seattle and Washington, among many other cities, offer some level of technical support or education to encourage sustainable building projects.
5. Other creative non-economic incentives. Some cities, such as Louisville, Ky., are considering reduced parking requirements and easing height restrictions for green buildings, another form of density bonus typically used to encourage sustainable projects within urban infill. Offering the opportunity for developers to negotiate benefits specific to their projects is another way to encourage sustainable development.
With motivating forces in the market for developers to invest in green building — including increased consumer demand for green products and sustainable space, and the gradual reduction of costs for green materials and services — cities may not have to offer as many monetary incentives to build green communities as they have in the past. While direct economic incentives remain important to encourage sustainable development, a city’s inability to offer those incentives does not necessarily mean that it will not be able to encourage green building. The investment of time, energy and creativity to increase the types of non-economic incentives could make a significant difference in a city’s ability to encourage sustainable development during times of financial challenge.
Monica Sloboda is vice chair of the Real Estate Practice Group for Walnut Creek, Calif.-based Morgan Miller Blair law firm. A graduate of Boalt Hall School of Law and a LEED-credentialed attorney, Sloboda represents commercial developers, tenants and owners in transactional matters including leasing, acquisitions and dispositions, land use, and development. She may be reached at MSloboda@mmblaw.com.
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