GDS metrics with higher energy efficiency requirements and better resilience considerations may result in increased construction costs, also known as the "green premium."
Industry estimates suggest that this "green premium" ranges between 0% - 7%. The increased construction costs can vary for numerous reasons, such as building type and size, supply chain disruptions, geographical location, etc. This green premium does not account for anticipated cost savings for future residents related to building maintenance, operation, and utility costs. It is important to note that this green premium can be considered an investment as it will return many more operational savings than the upfront capital costs over the lifetime of these buildings. Incentives can support and encourage the uptake of voluntary higher-tier targets.
Incentives are optional; they can be financial or non-financial, and it is recommended that stakeholders be engaged to determine what incentives might be desired by the local development community. Incentives must be predictable and simple, long-lasting, and easy to navigate with minimal administrative burden. Municipalities can partner with local utilities, non-profits, and other industry actors to develop and administer incentives.
In order to offset a portion of the increased construction costs, some GTHA municipalities have considered providing financial incentives to applicants in order to encourage them to adopt the voluntary higher performance standards. These incentives include development charge rebates, stormwater rebates, use of roof space for saleable units if mechanical system no longer needed on roof, servicing allocation, etc.
Other municipalities have explored some non-financial incentives to support and encourage the development community to uptake higher performance GDS targets. These include expedited reviews, recognition program - Sustainable Design Awards/Green Development Champion, etc.
Apartment Construction Loan Program and MLI Select from CMHC has been very helpful in driving lower carbon considerations in the rental market. CMHC provides lower cost access to capital for rental developments that meet environmental metrics. Low carbon utilities have spoken to how useful this program is to getting developers (at this stage it is only for rental properties) to considering geo-exchange for building heating.
| FINANCIAL INCENTIVES | NON-FINANCIAL INCENTIVES |
| Development charge (DC) rebates DC rebates can be provided to projects that achieve higher performance standards. However, it should be noted that these rebates reduce municipal revenue and must be significant enough to encourage participation in the program. | Expedited approval process Expedited development approvals can be provided for exemplary sustainability projects that go above and beyond minimum mandatory target requirements. |
| Community improvement plans (CIPs) CIPs allow municipalities to direct funds (using DC rebates, loans, tax grants, etc.) to specific areas or the municipality as whole provided they have enabling policies in their Official Plan. Developing and managing CIPs, including reviewing grants and loans, requires staff time, and the financial commitment is up to the municipality. | Servicing allocation Allocation of additional water and wastewater servicing for higher-performing buildings. This incentive is only effective in municipalities with limited servicing capacity or restrictions on allocation. |
| Saleable roof space For Multi Unit Residential and Commercial Buildings - Use of roof space for saleable units (e.g. penthouses) if mechanical system is no longer needed on the roof. | Awards and recognition programs Providing awards to builders for projects that meet high standards is an easy and low-cost incentive for municipalities to manage. While awards programs are still seen as positive, developers tend to prefer financial and other types of incentives over them. |