Going green can help Gateway City homeowners

Tax abatement program may encourage LEED certification

THE JUNE HOME SALE NUMBERS for Massachusetts once again showed that Greater Boston sale prices rose, and the market clearly benefited sellers. Unfortunately, that is not the case in many of our Gateway Cities outside the Boston region, where home values in most cases have yet to even recover their pre-recession levels. These cities were hit hard by foreclosures, and in some cases entire neighborhoods remain underwater. As the recovery creeps along, it’s clear that policymakers in these cities should explore new options to help residential property owners recover their home value and improve the economic picture for current and future residents.

One option for municipal leaders in these communities is to adopt an approach primarily used in the past by commercial developers: LEED certification. The Leadership in Energy & Environmental Design program, better known as LEED, has been used for years by commercial developers in the US and abroad to certify buildings that save money and resources and have a positive impact on the health of occupants, while promoting renewable, clean energy. This same scoring system can be applied to residential homes, with strong returns for homeowners and communities.

In practice, LEED certification for homes can begin with basic steps such as better insulation, more efficient windows and pipes, and the installation of ENERGY STAR appliances. Following LEED criteria can help homeowners save between $200-$400 per year on energy bills – perhaps more as our sky-high energy costs continue to rise in Massachusetts. But beyond the energy savings, LEED can help homeowners recover significant values in their homes.

A five-year study of LEED-certified homes in California between 2007-2012 found that LEED certification increased value by an average of 9 percent over comparable homes, and a 2014 McGraw Hill Construction Smart Market report found that 73 percent of single-family-home builders and 68 percent of multifamily builders say that consumers will pay more for “green” homes. Of particular note for Gateway Cities: the McGraw Hill report notes that 79 percent of multifamily developers will be building significant green housing by the end of this year, perhaps putting market pressure on existing multifamily owners to remodel and retrofit their properties in order to stay competitive.

The long- term benefits of going green and striving to achieve LEED certification are clear: lower energy costs, greater efficiency, and rising home values. But how can communities encourage homeowners to begin the process and help improve home values for the entire city? In Cincinnati, Ohio, city leaders tackled this problem head on, with a tax abatement program that could work for a number of Massachusetts Gateway Cities. The program allows property owners who retrofit and certify their homes to LEED standards to pay property taxes only on the pre-improvement value of their home for 15 years.

As a result of the program, hundreds of homes in Cincinnati were renovated and hundreds more were built new to LEED standards, completely rehabilitating several blighted neighborhoods. A 2013 survey of city residents found that 81 percent of new homebuyers and 49 percent of renovated homebuyers said the program influenced their decision to live inside the city limits rather than in the suburbs. That’s just one policy example, and a tax abatement may not work for every Gateway City, but if the end result is to help cities such as Brockton, Fall River, or Holyoke attract new residents and retain current residents, property values and the tax base will only benefit.

Meet the Author

Neil Angus

Vice chairman, US Green Buildings Council, Massachusetts chapter
If our Gateway Cities are going to rebuild their housing value and try to catch up to the Greater Boston region, it’s clear we need to try something different. Going green and putting our urban areas at the forefront of the LEED residential movement could be the key to reviving the housing markets in these communities.

Neil Angus is vice chairman of the US Green Buildings Council, Massachusetts chapter.