While these numbers aren't overwhelming by any means, they do suggest that a market for these homes is evolving - keeping in mind that this is new construction during a year when few new homes have been built. I believe the #1 factor for the increase is Cincinnati's property tax abatement program that incentivizes new development with a big push for LEED construction.
It's critical to note that any homeowner living within Cincinnati's borders can potentially take advantage of this tax program. The tax abatement has been around for a good while, initially neighborhood specific but growing city-wide over the years. The program was augmented with increased time and value benefits for LEED-certified property in 2007.
Some of the highlights of the program include:
- Tax abatement is 10 years for regular improvements or new construction, 15 years if LEED certified.
- The current amount eligible for abatement is $291,750; a whopping $530,450 if LEED certified.
- It applies to any 1 - 4 unit residential construction. For improvements, you must be able to show at least $2500 of work for 1 or 2 unit housing, $5000 for 3 - 4 units.
- For improvements, the value applies only to construction aspects, it does not impact the tax on the land value.
- The actual value of the construction / improvements is determined by the auditor's office (and yes, there is an appeals process).
Not surprisingly, the majority of new construction that is targeted as LEED certified is heavily concentrated in Hyde Park, Columbia-Tusculum, and nearby areas with a couple of projects associated with Over-the-Rhine development. In discussions with builders, these are the areas that support the higher price for LEED certification and enough home buyers that actively seek out "green" construction.
As one builder pointed out to me, at a certain price point home buyers are simply leaving money on the table if they don't get the certification. While you don't have to be LEED certified to achieve the energy savings available, the tax abatement ultimately pays for the additional costs one might incur - as well as being a possible plus when you sell the home down the road.
A couple of adventurous souls have attempted to bring in lower-priced LEED homes in other areas, but indications so far are that the profitability isn't quite there yet for the builder. Likewise, taking an existing home and getting LEED certification may not to get over the cost-benefit hurdles. That, however, doesn't mean improvements focused on energy and environmental savings can't still have a big payoff.