Philly's Green Roof Tax Credit

Turns out that in April of 2007, Philadelphia passed its first 'green roof' tax credit program. Who knew? Not a lot of people, it seems. In the 18+ months since the legislation was approved, only one application has crossed the desk of the Philadelphia Department of Revenue. Due to a recent change in leadership, it's not even clear whether that initial application was ever approved.

Last week, I attended an AIA Committee on the Environment/DVGBC event at the Center for Architecture with Joe Procopio from Philadelphia's Dept. of Revenue. From this point forward, he will be the primary reviewer of all incoming green roof tax credit applications. Interestingly enough, this program is not being coordinated through the Office of Sustainability. If there are any future modifications to the bill, I hope the two offices will coordinate as it would make sense to consider the effect of tax incentives from a broader perspective.

While it's encouraging to find out that the City is providing sizable incentives for installing vegetated roofs, it was disappointing to find out that the program's scope isn't very broad. According to the program requirements, the tax credit is applied to the Business Privilege Tax. Most applicants will likely be either developers or landlords. A typical homeowner or condo association will NOT qualify for the credit since they don't pay BPT.

Here's the deal:

1) To qualify, first you must own or operate a business within the City of Philadelphia and therefore pay the Business Privilege Tax. This is required because the incentive is issued in the form of "a credit against the Business Privilege Tax of 25% of all costs actually incurred to construct the Green Roof, provided that the total credit shall not exceed $100,000."

2) Next, you must follow all normal procedures in regards to obtaining a building permit from L&I and an engineer's certification that the structure can support the weight of a green roof.

3) The green roof must cover 50% of the building's rooftop or 75% of 'Eligible Roof Top Space', defined as the total space available to support a Green Roof, as certified by a structural engineer.

4) After the building permit and engineering report are in hand, the Green Roof Tax Credit Application can be filed with the Revenue Department.

5) If the Revenue Department approves the application, the taxpayer must agree to maintain the Green Roof for 5 years after its completion (this applies even if the property is sold, so it's advisable to include a provision and/or additional fee for maintenance in the sales contract).

This bill was originally sponsored by Councilman Jim Kenny, and Mr. Procopio did mention that any concerns about the legislation should be presented to City Council for consideration. It seems that if there is enough support, an expansion or modification of the bill might be possible.

In our discussion about the typical costs of a green roof, the concensus was that "all costs actually incurred to construct the Green Roof" would potentially include structural improvements, design/engineering fees, and other soft costs in addition to the actual cost of materials and labor.

So, how does this affect us? Well, it appears that Southern Liberties, LLC (that's us) should qualify for the green roof tax credit on the Montrose project. We already have all of the required certifications, so all that is left to do is submit the application. We totaled up all the expenses involved with the green roof and determined that it cost us about $10K start to finish. Our green roof covers 80% of our 600 SF roof (480SF) which works out to about $20/SF. (The materials and labor alone were $15/SF). This means that we should qualify for about a $2,500 credit towards our BPT liability, which can be spread out over a number of years if desired.

Download a copy of Philly's Green Roof Tax Credit application here.
View the Department of Revenue's summary of the program & application process here.
Read the original legislation here, Bill #070072 and Resolution #070079.
Read related testimony here, including a mention of other potential green roof incentives (i.e. reduced stormwater fees and homeowner inclusions).

Questions? Comments? Ideas? Post them for all to see.