Introduction

The Montgomery County Council approved the new Energy-Efficient Building Tax Credit legislation that improves upon the County’s existing LEED Green Building Tax Credit Program. The new program will be put into effect on January 1, 2022, and aims to incentivize building owners to receive higher levels of property tax credits for high-performance buildings. However, building owners that plan to take advantage of the current LEED Green Building Tax Credit have to submit an Intent to Apply application by January 1, 2022.

Upcoming Deadlines for Energy-Efficient Building Tax Credit

A proposed sunset process for ending the current LEED Green Building Tax Credit Program has been developed by key stakeholders in the commercial building sector. As of now, the current tax credit program is still available for use, but if you are planning on receiving the new Energy-Efficient Building Tax Credit you have to submit the Intent to Apply application form before January 1, 2022. It is advised that building owners who are even considering the tax credit program should still submit an Intent to Apply form.

Building owners should take into account the following LEED Green Building Tax Credit sunset phases:

• January 1, 2022: Building owners must submit an Intent to Apply application form
• January 1, 2023: Intent to Apply applicants must submit their LEED-EB application
• January 1, 2024: Intent to Apply applicants must submit their LEED-CS or LEED-NC application
• January 1, 2033: Official ending of the LEED Green Building Tax Credit Program

If you have completed the Intent to Apply application form you will have until January 1, 2023 to submit your LEED-EB application. Building owners that want to take credit for their project’s LEED-CS or LEED-NC certification, must complete construction by the end of 2023 and submit the final application by January 1, 2024 to receive the tax credit.

After these deadlines, the call for LEED-EB and LEED-CS or LEED-NC applications will be closed and the current green building tax credit program will conclude. After this, building owners will need to start the new Energy-Efficient Building Tax Credit Program.

Finally, by January 1, 2033, the applicants who are eligible and submitted their Intent to Apply application will receive the tax credit that they applied for and earned. After this date, the county will no longer pay out that tax credit and the program will be concluded.

Important Links to review:

• To apply for the Intent to Apply application form click here.
• LEED Green Building Tax Credit Application Form (LEED-EB/CS/NC) click here.

Current LEED Green Building Tax Credit Program

Multi-family residential and non-residential buildings that pursue a LEED New Construction or Core & Shell certification or a LEED Existing Building certification are eligible. Buildings between 5,000 and 10,000 sf of gross floor area must achieve a silver certification (at minimum) and buildings larger than 10,000 sf of gross floor area must achieve a gold certification (at minimum). The level and duration of the tax credit vary depending on the certification system and level. See the table below for further details.

Outlook – The New Energy-Efficient Building Tax Credit Program

Over the years, LEED certifications have become more commonplace which resulted in the LEED Green Building Tax Credit program being oversubscribed. The new Energy-Efficient Building Tax Credit Program aligns with the County’s ambitious climate goal of eliminating greenhouse gas emissions by 2035 by shifting the primary focus of incentives to energy reductions above the current code requirements. The two-tier incentive program design still credits building owners who achieve higher LEED Certification levels or LEED alternative compliance paths which results in receiving higher credit. This incentive structure is set to have regular reviews every three years to ensure that it is remaining an effective sustainability incentive tool that aligns with the County’s climate plan.

Stay tuned for Part 2 of this blog series where we will discuss the Energy-Efficient Building Tax Credit Program in more detail and break down what the incentive structure is and what benefits are available.