LEED Exposed

Taxpayer Costs

LEED can add significant costs to a new building or renovation project—often paid for by taxpayers.

Even though developers and contractors utilize the easier ways to get LEED points, LEED certification can still add significantly to the cost of a new building or renovation project. And because 14 federal departments and agencies, 34 states and more than 200 local governments encourage or require LEED certification for government funded building projects, that additional cost is often paid for by taxpayers.

The General Services Administration, the agency that oversees federal government building construction, estimates that soft costs alone—including fees to the USGBC and to LEED consultants—add about $150,000 to the price of a new federal building. That figure doesn’t include the added construction costs to meet LEED certification requirements.

State mandates have also added to taxpayer costs. In Ohio, a mandate that all new public schools achieve LEED certification has added $131 million in construction costs since 2007. In New Mexico, LEED certification for new schools has added between $2,350 and $7,950 in certification costs alone.

D.C. requires all of its new government buildings to be built to LEED standards at a significant cost to District taxpayers. An analysis by the Examiner of the District’s LEED certified buildings conservatively estimates that D.C. has paid more than $300,000 in registration and certification fees. When additional planning and building costs and the cost to produce documentation to the USGBC is factored in, the taxpayer cost quickly multiplies.

All of this taxpayer funding has allowed the USGBC to earn millions in certification fees. In 2012 alone, the USGBC collected $28 million in certification fees and $6 million in registration fees from taxpayers, corporations, and homeowners.

Taxpayers aren’t just paying the additional costs for new public LEED-certified buildings—they’re also footing the bill for private LEED-certified buildings through tax incentives.

For example, in Nevada new commercial buildings that achieve the LEED Silver level receive a 25 percent reduction of the property tax payable each year for 5-10 years, LEED Gold buildings receive a 25-30 percent reduction of the property tax payable each year for 5-10 years, and LEED Platinum buildings receive a 25-35 percent reduction of the property tax payable each year for 5-10 years. This law helped a casino save $20 million in property tax breaks.

Cincinnati passed one of the most generous LEED tax breaks, an automatic 100% abatement of property taxes for all new construction and building renovations that are at least certified at the LEED Certified level (the lowest certification threshold). There is a maximum abatement amount of $500,000 per dwelling unit, unless the Platinum level of LEED certification is reached, in which case there is no maximum amount. The city offers generous tax breaks for LEED, but is proposing $11.5 billion in cuts to the city’s budget.

If LEED isn’t providing proven environmental savings, should taxpayers be paying for LEED-certified buildings?

“Buildings with higher ratings benefit from higher tax breaks, which can result in literally millions of dollars in savings over time.”