A major state incentive to build green energy-efficient homes – which drove 70 percent or 588 of the 847 new homes last year in the city – has been tapped out almost three years ahead of its expiration date.
“We are no longer taking applications for the residential portion of the Sustainable Building Tax Credit,” said Ken Hughes of the Energy, Minerals and Natural Resources Department in a mass email to homebuilders and others this week.
Funds to cover the tax credits for single-family homes either have been allocated or are pending allocation to a waiting list of applicants through 2016, which is the last year the tax credit is available, he said. The credits are administered by EMNR’s energy conservation and management division.
A campaign will be mounted to revive the tax credit for homes through additional funding, said John Garcia of the HBA, the homebuilders association in the Albuquerque metro.
“Our top priority is to get this resolved in terms of policy,” he told the Journal. “Green building is one list we’re at the top of nationally. This credit was the incentive to do it.”
Albuquerque first gained recognition for green building after more than a third of all single-family homes built in 2011 were green-certified, twice the pace of green-certified home construction nationwide at that time.
During 2013, 70 percent of the homes built in the city were green-certified. Citing a national survey by McGraw-Hill Construction, Garcia said an average of 22 percent to 25 percent of homes built nationwide were green in 2013.
The popularity of green-built homes, driven by both consumer demand and government incentives, resulted in demand gradually outstripping the supply of the state tax credits.
The credits provided some buoyancy to homebuilding at a time when it was running at 25- to 30-year lows.
Introduced in 2007, the tax credits were renewed during the 2013 legislative session at reduced funding levels. At the time of renewal, speculation was the credits wouldn’t last through the end of 2014, thus Wednesday’s announcement was not entirely unexpected.
While demand for tax credits for homes has been strong, that hasn’t been the case for the smaller annual allotment of credits for commercial and apartment construction. Unused commercial credits could be shifted to homebuilding, but those would go to applicants already on the waiting list, Hughes said.
“I don’t want to give any false hopes,” he told the Journal.
The tax credits, which provide a dollar-for-dollar reduction in state income taxes, can be spread over four to seven tax years. Eligible projects must be completed and certified by either the Build Green New Mexico or Leadership in Energy and Environmental Design program.