Nudging Towards Green Communities

I wrote last week about LEED-ND, the new USGBC product for creating sustainable neighborhoods.  LEED-ND and its predecessors like New Urbanism are private sector attempts to make sustainable, walkable communities more marketable. In theory, everyone should want to live in communities where services are readily available, where streetscapes are conducive to community building and where green spaces are an integrated part of the landscape. 

The reality has been more mixed. Mixed-use, well planned developments are more expensive to build, and often have difficult land approval processes which stretch out the development timeframe. There are criticisms about increased density, school costs and other issues. 

But, there is a policy mechanism which could be implemented to radically shift development patterns in the United States towards more sustainable communities without imposing external structures like LEED-ND or New Urbanism.  One of the sacred cows of tax policy in the United States is the mortgage interest tax deduction.  In most cases, all mortgage interest can be deducted from U.S. federal taxes.  What if the mortgage interest tax deduction were phased out for development on the periphery?  Development around transit nodes, in mixed use areas and in areas which are ripe for redevelopment (Camden?) could qualify for the deduction, development in ex-urban areas would not qualify, or qualify for a lower deduction.  Would this policy "nudge" work to transform our built environment and lead to the rapid development of sustainable communities? Is it even politically possible given the "sacred cow" nature of the mortgage interest deduction?     

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Christopher Hill - May 6, 2009 12:18 PM


I am not sure that this would work for three reasons: 1. This is an incentive for homebuyers to buy instead of rent. Without it, we would not get much new construction (green or otherwise), 2. It would only hit new construction, I find it hard to fathom that we could take away the mortgage deduction for purchase of an existing home (incentives to renovate existing buildings to green standards is another issue), 3. Too much stress on the housing market and your "sacred cow" point preclude it politically.

Just my thoughts, keep up the good work.

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