Patagonia’s Distribution Center in Reno, Nevada (image above) recently received a LEED Gold rating from USGBC for its 171,000 square foot expansion, and the company was just awarded a fifty percent abatement on its property taxes over the next seven years through a state-level green building tax incentive program. Patagonia has realized a forty-seven percent savings in energy costs and forty-two percent reduction in water usage in the expanded facility; ninety-three percent of all construction waste during the course of the project was recycled. The company seems pleased with its results to date.
“These green initiatives are part of Patagonia’s philosophy. Doing the right things in business that sustain, not deplete, our environment are at the very core of our company. If our efforts are a tipping point for others to do the same, that’s great,” said Dave Abeloe, director of Patagonia’s distribution center. “We realize the up front costs are a bit more, but in the long run, we’ll recoup our investment and be true to our mission of reducing our impact on the earth.”
Since 2006, when Assembly Bill 3 (“AB3”) took effect, Nevada has required that state-funded buildings earn a LEED Certified rating from USGBC. AB3 also requires that two public buildings per fiscal year be designated as “test projects” and meet LEED Silver. What’s most interesting about AB3 is that it also provides property tax abatements for private commercial development. The abatements are fifty percent over five, seven, and ten year periods for LEED-NC projects that achieve Silver, Gold, and Platinum ratings, respectively. A similar abatement applies to LEED-EB projects, but the amount is fixed at thirty percent.
Patagonia’s expansion is a good example of how effective incentives can be in encouraging sustainable building practices in the private sector. While abatements do not provide an owner with an added benefit for the entire lifetime of the building (as a density bonus will), the period of time over which the abatement remains in effect can give owners a substantial reason to participate in an incentive program. As far as I can tell, Nevada is the only state that currently provides property tax abatements, but others would be well-served in following suit when debating carrot or stick green mandates.