(a) Intent. The intent of this Section is to:
(1) encourage building owners to increase the energy performance of newly constructed buildings beyond current Building and Zoning Code requirements at time of application;
(2) incentivize building owners to reduce the energy and climate impacts of newly constructed buildings, as the built environment generates more than half of the County’s measured community-wide greenhouse gas emissions;
(3) advance the County’s aggressive climate goals of an 80 percent reduction in greenhouse gas emissions by 2027 and zero emissions by 2035;
(4) institute regular review of the tax credits outlined in this Section to ensure that they are meeting the goals under paragraphs (1) through (3); and
(5) implement a tax credit under Section 9-242(a) of the Tax-Property Article of the Maryland Code, as amended.
(b) Applicability. The credit authorized by this Section applies to any tax year beginning January 1, 2022.
(c) Definitions. In this Section the following words have the meanings indicated:
BRE Global means the Building Research Establishment Global.
BREEAM means the Building Research Establishment Environmental Assessment Method rating system administered by BRE Global.
Building Code requirement means any code, standard, zoning ordinance, or other requirement related to commercial and multi-family building construction and permitting processes that applies to a newly constructed energy-efficient building.
Equity Emphasis Area means an area identified as an equity emphasis area by National Capital Region Transportation Planning Board.
New Building Sustainability Tax Credit is the property tax credit received for earned building certifications described in this Section.
Director means the Director of the Department of Finance or the Director’s designee.
Newly constructed energy-efficient building means:
(A) An unoccupied non-residential or multi-family residential “core and shell” building, of at least 10,000 square feet in gross floor area, with full mechanical systems, electrical distribution infrastructure, and a weather-sealed thermal envelope that has achieved substantial completion and received a Certificate of Occupancy from the Department of Permitting Services within the past year;
(B) A newly constructed non-residential or multi-family building, of at least 10,000 square feet in gross floor area, that has achieved substantial completion and received a Certificate of Occupancy from the Department of Permitting Services within the past year; or
(C) A non-residential or multi-family building, of at least 10,000 square feet in gross floor area, that has undergone a major renovation that warrants bringing the entire building up to current Building Code standards and has received final inspection and approval from the Department of Permitting Services.
New Building Energy Reduction Tax Credit is the property tax credit received for energy performance improvements described in this Section.
LBC or Living Building Certification means the Living Building Certification administered by the International Living Future Institute.
LEED means the Leadership in Energy and Environmental Design rating system administered by the USGBC. In this Section, LEED building certification includes all eligible rating systems for newly constructed non-single-family-residential buildings.
NGBS means the National Green Building Standard rating system administered by Home Innovation Research Labs.
PassiveHouse means the PassiveHouse standard administered by PHIUS.
PHIUS means the PassiveHouse Institute US.
Property tax means the general County property tax and all special service area taxes.
USGBC means the United States Green Building Council.
(d) Credit. The Director must allow a tax credit each eligible year against the property tax imposed on a newly constructed energy-efficient building under this Section.
(e) Application.
(1) An application by the owner of a newly constructed energy-efficient building for a tax credit must be in the form prescribed by the Director and must include:
(A) a certification from the Department of Permitting Services within the past year indicating the percentage performance above current Building Code requirements at time of application demonstrated by the newly constructed energy-efficient building for the New Building Energy Reduction Tax Credit; and
(B) if the New Building Sustainability Tax Credit is sought after receiving the New Building Energy Reduction Tax Credit, verified documentation by the newly constructed energy-efficient building demonstrating qualification for the New Building Sustainability Tax Credit within two years after obtaining a use and occupancy permit.
(2) A building owner that has received either a New Building Energy Reduction Tax Credit or a New Building Sustainability Tax Credit may not reapply for either credit for the same newly constructed building in any later tax year.
(f) New Building Energy Reduction Tax Credit.
(1) A newly constructed energy-efficient building may receive a New Building Energy Reduction Tax Credit for achieving energy use reductions as outlined in this subsection and, if that credit is granted, may receive an additional New Building Sustainability Tax Credit as described in subsection (g).
(2) To be eligible for the New Building Energy Reduction Tax Credit, a newly constructed energy-efficient building owned by the applicant must achieve a minimum 10 percent increase in energy performance above the current applicable building code requirements at time of application using an energy modeling software approved by the Department of Permitting Services.
(3) For the New Building Energy Reduction Tax Credit, the percentage of the annual County property tax credit awarded for 4 years is calculated by rounding a newly constructed energy-efficient building’s performance above building code requirements to the nearest whole number and multiplying it by the multiplier below:
(A) if the building’s performance above Code is between 10 and 20 percent, multiply the building performance percentage figure by 0.5;
(B) if the building’s performance above Code is between 21 and 30 percent, multiply the building performance percentage figure by 1.0;
(C) if the building’s performance above Code is between 31 and 40 percent, multiply the building performance percentage figure by 1.5; or
(D) if the building’s performance above Code is above 40 percent, multiply the building performance percentage figure by 2.0.
(g) New Building Sustainability Tax Credit. The owner of a newly constructed energy-efficient building seeking the New Building Sustainability Tax Credit must apply for that tax credit after receiving the New Building Energy Reduction Tax Credit.
(1) The amount of the New Building Sustainability Tax Credit must be equal to:
(A) 25% of the property tax owed on the building for 4 years if the building achieves the most recent version available of LEED Gold, NGBS Gold, PHIUS+/PassiveHouse, BREEAM-NC Excellent or an equivalent standard;
(B) 75% of the property tax owed on the building for 4 years if the building achieves the most recent version available of LBC Petal Certification, LEED Platinum, NGBS Emerald, BREEAM-NC Outstanding or an equivalent standard; or
(C) 75% of the property tax owed on the building for 5 years if the building achieves the most recent version available of Living Building Certification.
(2) To be approved for the New Building Sustainability Tax Credit, an energy-efficient building must first be approved for the New Building Energy Reduction Tax Credit.
(h) Expanded credit for buildings in Equity Emphasis Areas.
(1) The owner of a newly constructed energy-efficient building located within an Equity Emphasis Area at the time of application may qualify for an expanded credit under this subsection.
(2) The owner must apply for a credit under this subsection simultaneously with an application for the New Building Energy Reduction Tax Credit.
(3) The amount of the tax credit under this subsection must be added to the New Building Energy Reduction Tax Credit for each year that the New Building Energy Reduction Tax Credit is granted.
(4) The amount of the tax credit under this subsection must be equal to 10% of the annual property tax owed on the building.
(i) Total Maximum Credit. The maximum credit under this Section that an energy-efficient building may be granted in any fiscal year must not exceed 100% of the building’s annual property tax liability.
(j) Credit Review.
(1) By October 1 of each year, the Director must prepare a report on the status of the New Building Energy Reduction Tax Credit and the New Building Sustainability Tax Credit.
(2) Every 3 years, the County Executive must submit a report to the Council reviewing the effectiveness of the New Building Energy Reduction Tax Credit and the New Building Sustainability Tax Credit and making recommendations on any credit alterations.
(k) Regulations. The County Executive may issue regulations under method (2) to administer the New Building Energy Reduction Tax Credit and the New Building Sustainability Tax Credit. (2020 L.M.C., ch. 28, § 1; 2021 L.M.C., ch. 26, § 1; 2021 L.M.C., ch. 28, §1.)