Trying to encourage development and energy savings.
Homebuilder Chad Ludeman loves building in Philadelphia. After all, it's his hometown. And even though the costs are high and the returns are low, Ludeman has found a way to beat the system. His company, Postgreen, created a new model of home construction called the 100K House. Using a European style of architecture, open floor plans, prefabricated wall units and a number of energy-efficient innovations, Ludeman and partner Nic Darling, have created a model for the 21st century Philadelphia row home. Best of all, it costs only $100,000.
The pair cut the ribbon on their first home earlier this month. They have already sold four.
So when a bill came through City Hall this month aiming to create incentives for smart, environmentally friendly development, Postgreen looked like poster boys.
The bill, introduced March 5 by council members Blondell Reynolds Brown and Curtis Jones Jr., would tie the city’s highly criticized 10-year tax abatement program to LEED (Leadership in Environmental and Energy Design) certification. The bill would shrink the tax abatement, awarding builders on a sliding scale based on the level of energy efficiency they achieve in the building process.
But as it turns out, Postgreen opposes changing the tax abatement. “This bill would probably make things more difficult for us,” Ludeman says. “There are only a few of these third-party providers that can certify a LEED home and they would be swamped with builders trying to get up to speed. We just think there are smarter ways to go about it.”
Ludeman and Darling were not alone. Mayor Nutter surprised champions of his energy policy by opposing the bill. The mayor’s boisterous support of green initiatives and statements calling for Philadelphia to become the greenest city in the country led many to assume the measure was a slam-dunk.
Deputy Mayor Andy Altman says the bill is not as beneficial as its supporters would have you believe, and says the administration wants to leave the tax abatement system in place and untouched.
“Everyone agrees we want to get to LEED standard, but the tax abatement is the wrong way to achieve that,” Altman says. “In the economic climate we are in, the last thing you want to do is take away a development incentive.”
Supporters of the LEED incentive site similar standards in cities like Washington D.C. and Boston, both of which use LEED to meter their tax incentives. But Altman says Philadelphia cannot draw the rent levels of those cities. This keeps Philadelphia’s cost of living low but also reduces the return on investment for potential development. The tax abatement, Altman says, is what keeps development going.