Tax break could save green for home buyers who go green

Sunday, Dec. 17, 2006 | 8:36 a.m.

A state lawmaker who pushed legislation that gave tax breaks to developers who build environmentally sensitive commercial buildings wants similar incentives for the housing industry.

Sen. Randolph Townsend, R-Reno, said he plans to introduce legislation in the 2007 Legislature that would give home buyers property tax breaks if they purchase so-called "green" homes.

Townsend also said he would like to give builders incentives for constructing green housing - perhaps by offering a sales tax break for using certain insulation and roofing materials or expediting the processing of building permits.

"We are trying to be creative and put things on the table," said Townsend, who has consulted with homebuilders , utilities and consumer advocates. "We are looking at property tax breaks, which of course would move consumers to purchase the home. Imagine what great incentives there would be for builders if people could include that in their purchase decision."

Existing homeowners could get sales tax breaks by replacing windows, wrapping water heaters with insulation and taking other conservation measures, he said.

Townsend said it's a natural progression to extend incentives to the homebuilding industry because the property tax breaks put in place in September are already encouraging commercial developers to pursue green buildings. The builders get a tax abatement of up to 50 percent for up to 10 years on a sliding scale system.

If builders of single-family homes, apartments and condominiums construct housing that's more energy-efficient, Nevada can hold off on purchasing additional power and keep costs lower for consumers, Townsend said. That would also improve the credit-worthiness of Nevada Power and lower its cost to build its system, thereby keeping bills lower, he said.

A proposal that gives homebuilders incentives to build green housing has the support of the Southern Nevada Home Builders Association. In October, the group announced a program to guide builders who want to construct more environmentally sensitive housing and expects the Las Vegas Valley's first batch of homes meeting those standards to be completed by the end of 2007.

Following those guidelines could add $5,000 to $10,000 to the price of a new home.

"We have suggested there are already incentives for the commercial (builders) to do green buildings and that government policymakers might want to look at incentives for residential, even though there are those already doing green building," said Monica Caruso, the association's spokeswoman. "The incentives might encourage smaller homebuilders into this building program."

In its green program, builders reduce the quantity of materials and waste through a framing plan, install gutters to divert water from the foundation, use recycled materials and renewable materials, improve energy efficiency and include high-efficiency plumbing fixtures, install smart-water landscaping and install carpet and padding with green labels.

Townsend said he's optimistic any legislation extending the incentives to homebuilders and consumers will get the support of state lawmakers.

The biggest concern will likely be the cost of the tax breaks to the state treasury, especially since homebuilders are already moving in the direction of building green homes to meet consumer demands.

The potential loss of tax dollars for a commercial program isn't known but could run into hundreds of millions of dollars, depending upon the number of buildings that qualify, said Tim Rubald, executive director of the Nevada Commission on Economic Development.

Townsend said the cost to the state treasury for adopting residential incentives is worth it for what it saves in energy consumption and costs.

"It's like the old commercial. 'You can pay me now or pay me later,' " Townsend said.

Any residential incentive program for Nevada could be delayed because the U.S. Green Building Council has yet to adopt standards for green home construction. Those standards are forthcoming, officials said.

A version of this story appears in In Business Las Vegas, a sister publication.