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Incentives to Promote Green Affordable Housing

A picture of the SOLARA apartment community in Poway, California.<br>Image Courtesy: Community Housing Works, Owner/Developer
Completed in 2007, SOLARA is California's first, fully solar-powered apartment community. A photovoltaic system produces approximately 90 percent of the electricity needed to meet the demands of this 56-unit affordable housing complex. Green affordable housing or affordable housing incorporating sustainable building practices and materials can provide significant financial and environmental benefits to residents over the long term. However, the upfront costs associated with green building can be higher when compared to regular building practices. To offset these development costs and promote green affordable housing, many state and local governments offer financial assistance in the form of tax credits, rebate programs, tax exemptions, and funding grants. In this article, we’ll take a look at some regulatory incentives adopted by state and local governments, such as lot size reductions, density bonuses, and expedited approvals.

Development Standards

In March 2009, the city of Redmond, Washington adopted its green building incentive program to encourage the incorporation of sustainable building and infrastructure techniques in residential developments. Points are assigned for each green building technique incorporated in a development, ranging from storm water management, drought-resistant vegetation, and green roofs to native soil preservation. In exchange for using these techniques, the city provides incentives, such as priority building permit processing, lot size reductions, unit type flexibility, and density bonuses. The type of incentive is based on the total number of points earned. For example, reducing the impervious surface area by 20 percent will earn 2 points. To qualify for a density bonus of 10 percent, a project must have earned 5 points. An additional 4 points will make the project eligible for a 30 percent reduction in minimum lot size requirements.

Expedited Permitting and Fee Waivers

A picture showing the installation of photovoltaic roof panels.<br>Image Courtesy: U.S. Department of Energy/National Renewable Energy LaboratorySeveral communities provide expedited permitting for residential developments that incorporate green features. Builders installing solar systems for “prescriptive path” residential projects (projects that meet certain structural requirements) in Portland, Oregon can take advantage of the city’s streamlined electronic permit processing system. Trained contractors can submit plans and permit applications online and receive approval within 24 hours. Sarasota County, Florida offers expedited processing for rezoning, site plan reviews, and building permits for green affordable housing projects that meet the Florida Green Building Coalition’s green development standards. Residential projects with 20 percent of units set aside as affordable housing can receive site plan approvals within 5 working days and building permits in 3 working days. In Ashville, North Carolina, residential units that qualify for certain green building certifications are eligible for building permit and plan review fee waivers. The city waives building permit fees altogether and reduces plan review fees by 50 percent for these units.

Tax Incentives

A number of states and localities have developed tax incentive programs to encourage green building. Most states award priority points for green design practices when allocating low-income housing tax credits, and allow property and sales tax exemptions for those which incorporate renewable energy systems. A website funded by the United States Department of Energy, Database of State Incentives for Renewables and Efficiency (DSIRE), catalogues various green building incentives available at the federal, state, and local levels across the nation. Maryland is one such state that allows local governments the option of providing property tax credits for multifamily residential and low-income residential developments with qualifying onsite energy production and conservation devices. According to DSIRE, five counties in the state have adopted the tax credit program thus far. Most recently, the city and county of Honolulu, Hawaii voted to allow property tax exemptions for any improvements or alterations made to buildings that increase energy efficiency or make use of alternative energy sources.


While the material and system upgrades and design strategies that make housing both affordable and green yield their benefits incrementally over the usable life of a dwelling, the (at times) higher upfront costs can sometimes discourage residential developers. As more and more local governments adopt mandatory green requirements in pursuit of sustainable growth, it is in a community’s best interests to provide incentives that can reduce upfront costs in order to promote green affordable housing projects.

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