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Commercial Green Building Tax Credit
Overview
On April 30, 2012, the Mayor and Council adopted an ordinance to revise Chapter 22 (Taxation) of the Rockville City Code to create a new pilot high performance building property tax credit for existing commercial buildings, also referred to as the green building tax credit. 

The Rockville Chamber of Commerce and the Environment Commission recommended the City develop this tax credit to create a financial incentive for owners of existing commercial buildings to voluntarily invest in sustainable building practices and operations, improve building stock, support green jobs and businesses, and provide Rockville with a competitive real estate advantage.
 FY 2016 
(July 1, 2015- June 30, 2016) 
Appropriated Tax Credits $250,000
Reserved/
Issued Tax Credits                         
$44,470
Available Tax Credits $205,530

The tax credit is available to existing commercial buildings* that pay City of Rockville real property taxes. This may include offices, retail and service establishments, hotels, and multifamily residential structures with four or more stories. The building must achieve Silver, Gold or Platinum certification in the US Green Building Council’s LEED for Existing Buildings: Operation and Maintenance rating system, also known as LEED EB: O&M, on or after July 1, 2012. The building must also achieve ENERGY STAR certification through the US Environmental Protection Agency and annually benchmark energy performance for the five year duration of the annual tax credit. The tax credit is only issued after the improvements are made and the building has received third party certification.

The adopted FY 2016 Budget appropriates $250,000 for the tax credit for the fiscal year. Tax credits are processed as a refund and are available on a first-come, first-serve basis while funds remain available. The tax credit is envisioned to be a five-year pilot with approval of final tax credit applications to end in the fifth year.

Amount and Duration
  • The tax credit is based on a percentage of "allowable cost," which is the total amount invested after July 1, 2012 to improve the structure and operations to meet certification as a high performance building. Allowable costs may include professional services (such as energy analysis, commissioning, engineering, architectural, etc.) and building retrofits and improvements (such as plumbing fixtures, lighting, energy efficiency upgrades, renewable energy systems, etc.).
  • The allowable cost may not exceed $400,000 per applicant, which limits the maximum annual tax credit to $60,000 per applicant.
  • The annual tax credit is calculated as the following percentage of the allowable cost: 5 percent for LEED Silver, 10 percent for LEED Gold, and 15 percent for LEED Platinum.
  • The tax credit is refunded from the annual real property taxes paid. If the annual tax credit calculated is more than the annual real property tax liability, the tax credit is limited to the City real property tax liability.
  • The duration of the real property tax credit is five consecutive years and is subject to annual expenditure appropriation by the Mayor and Council.

Requirements

Resources

Applications
Commercial property owners interested in applying for the tax credit should contact the City's Environmental Management Division for more information.  The tax credit may also be combined with utility energy incentives and Montgomery County's Green Building Tax Credit.

  • Pre-Application demonstrates intent to comply with the tax credit requirements. This application supports budget planning and is required to reserve tax credits for up to one year while the building is undergoing the LEED certification process.      
  • Final Application demonstrates compliance with all requirements.  This application is required for the City to issue the tax credit refund. 

Applications are reviewed in order of receipt of completed applications. Incomplete applications will be returned to the primary contact.  Tax credits are reserved/issued in the order in which the City receives completed applications. The tax credit will be paid in the form of a refund.

*The tax credit does not apply to owners that construct new buildings or owners who undertake significant building renovations or additions affecting more than 50 percent of the total building floor area, since these actions are governed by the requirements of the City's Green Building Code (City Code Chapter 5) and the LEED for new construction program. While the tax credit is primarily aimed at providing an incentive to upgrade an existing building, a new or significantly modified building may also become eligible after the building has been in operation for at least twelve continuous months and at least 50 percent of the building floor area is occupied. However, the tax credit would only be applied to further investments in the property after that point in time.