By: Mark A. Rysberg
Michigan Senate Bill 1111-1114 (2010) provides financial incentives for construction and renovation projects achieving LEED certification. Based on the level of certification obtained, a project can enjoy a property tax reduction somewhere between 20-50% of the post-development ad valorem taxes plus a limited exemption from the State Education Tax. Importantly, the bill only allows for 25 projects to be granted the State Education Tax exemption annually.
Attaining LEED certification requires navigating a process designed to take a project from conception through certification. The steps LEED identifies can be summarized into three categories; registration, application and certification. The initial registration process is the gateway into the process of LEED certification. The costs of registration can range from $900-1200. Once a project is registered, it enters the application phase. During this phase the design team compiles a set of documents with unique LEED requirements. Once the documents are complete, the application is submitted for review and the owner pays an application review fee ranging from $2,500-30,000 depending on the size of the buildings.
The project is then audited to see how closely it was able to comply with the specific LEED requirements. Each requirement is allocated a point value for certain environmental design components. The total possible point allocation is 120 with certifications available at 40-49 points (Basic), 50-59 points (Silver), 60-79 points (Gold), and 80 points or above (Platinum). Upon completion of the audit, or application review, the project is awarded the appropriate level of certification. Based on the proposed legislation, the level of certification will dictate the amount of tax incentives available for the project.
The proposed legislation has a laudable purpose–promoting environmentally sustainable and efficient construction. However, the question has been posed by some in the industry whether the LEED certification process is the most environmentally efficient and effective process to meet the intent of the proposed legislation (here).