(Written by Jack Milarch – NMHBA EVP/CEO – Originally published in the May 2007 Housing Journal)

New Green Homes Can Get $11,000 Tax Credit

Governor Richardson signed the Sustainable Building Tax Credit bill recently, creating a potential for up to $5 million annually in New Mexico tax credit for homes built to either the Build Green New Mexico Gold Standard or the LEED for Homes Silver Standard. Qualifying homes must also be built to a 40% increase over minimum energy code requirements. Commercial buildings can qualify for another $5 million annually.

The bill itself sets out the big picture but, as is sometimes the case with legislation of this type, the language is devoid of details. A group of commercial architects and builders and a group of residential builders and designers met separately with Energy, Minerals & Natural Resources Department (EMNRD) to hammer out the details of each program. One thing the bill does say is that the tax credit will be granted on a first-come first-served basis, and much of the discussion with Susie Marbury, Energy Efficiency & Green Building Administrator for EMNRD, centered on how this provision will be implemented.

Both methods of qualifying a building as tax credit compliant require a third party verification and evaluation. The tax credit program envisions the qualified energy “rater” checking the design and construction to verify building performance and, for home construction, this includes whole house blower door and duct work tests.

One of the reasons for concern among the contractors is that qualified third party energy raters are in short supply, especially in less populated areas of the state. Following up on the builders’ concern, NMHBA staff conducted a web search of RESNET (a major building energy rating entity) at www.natresnet.org/directory/raters.aspx recently and turned up two raters based in the Albuquerque area and a number of rating providers located outside the state. Contractors at the meeting noted that could be a problem, especially if the $5 million allocated for 2007 doesn’t “roll” into next year. That could create a traffic jam at year end as many builders try to get their projects qualified in the latter months. Karen Cook, a “carbon neutral” and energy conservation activist who worked with Governor Richardson’s office on drafting and lobbying the bill to success, listened to these concerns and noted she will work with the Governor’s office on the issue of allocation carryover and will let the group know how these conversations are going.

Homes can qualify by being certified compliant through either Leadership in Energy and Environmental Design (LEED) or by Build Green New Mexico (BGNM) programs. LEED has been a commercial building based program which is just now developing standards for residential buildings. Build Green New Mexico is an organization started several years ago by Albuquerque-based green builders and designers concentrating on residential construction. Both LEED for Homes and Build Green New Mexico have been tasked in the new tax credit law with being “gate keepers” for the residential building tax credit program.

Of the two qualification organizations, Build Green New Mexico is reported to be the most flexible for building qualification. Both programs seem to be in continuous evolution, which probably isn’t surprising considering the infancy of green building certification programs overall. Build Green New Mexico’s qualification system uses the National Association of Home Builders (NAHB) Model Green Home Building Guidelines as the starting model. This program is based on a point system, and points may be gained by matching up “green” features of a home with hundreds of possibilities noted in the guidelines. The basic NAHB guidelines may be viewed at www.nahbrc.org/greenguidelines/. However, be aware that BGNM has instituted minor modifications to emphasize water conservation and indoor air quality issues they felt were important to a New Mexico application. You may view information about Build Green New Mexico at www.thegbi.org/newmexico/. LEED information may be viewed at their website at www.usgbc.org/DisplayPage.aspx?CMSPageID=147.

If you are interested in reading the Sustainable Building Tax Credit legislation you can find it at the Legislature’s website, www.legis.state.nm.us/lcs/, by using Bill Finder and reading the final version of SB 463. The portion of the bill dealing with the sustainable building tax credit begins on page 21. Our Housing Journal will publish more information as details of the program become available.

*Late news on the issue of year to year “roll over” of credits is that roll over will not be allowed. Therefore any tax credit not issued during a year will be lost.