NGBS: An Alternative Energy Code Compliance Option

As energy efficiency mandates are becoming more difficult and costly to meet, the National Green Building Standard (NGBS) Green certification is emerging as an attractive alternative. Alternative code compliance options, like NGBS Green, are beneficial to local jurisdictions and builders alike, as they provide compliance flexibility without compromising energy performance, and can streamline permitting processes and timelines.

States and local jurisdictions have begun formally recognizing NGBS certification as a compliance path to state energy code requirements, giving home builders the option to choose the NGBS path to comply with building codes while building a home that can be marketed as more energy efficient than its peers.

Examples include:

• In January 2023, the Maryland Department of Labor, which has jurisdiction over the state’s building codes, formally deemed the NGBS as equivalent compliance for the 2021 IECC. Prior to this decision, numerous jurisdictions in Maryland already required or recognized NGBS Green certification for code compliance and/or incentives.
• In Utah, the NGBS is recognized as an approved, alternate compliance path for state energy efficiency codes. Buildings that achieve the NGBS Gold rating in the energy efficiency category are legally deemed to exceed the state’s baseline code requirements.
• In Chicago, achieving Gold or Emerald certification under the 2020 NGBS is recognized as an alternative compliance pathway to the 2021 IECC. 

As the use and reliance on the NGBS continues to grow, so do the opportunities for expanding its recognition and value. NGBS Green provides additional financial and other incentives at the local, state and federal level.

Local Level

Municipalities and counties are increasingly using NGBS as a benchmark for determining local benefits.  

Examples include:

• Baltimore County, Md., offers the High-Performance Buildings Tax Credit, which provides property tax credits for commercial and multifamily residential buildings achieving NGBS Silver or higher.
• In New York, state legislation authorizes local governments and school districts to grant real property tax exemptions for new residential construction or renovations that exceed $10,000 and achieve NGBS Green certification.
• In Miami, several jurisdictions recognize NGBS Green as satisfying local sustainable building mandates.

State Level

Most state incentives for NGBS are linked to the Low-Income Housing Tax Credit (LIHTC). Nearly 30 state Housing Finance Agencies (HFAs) have formally recognized NGBS Green in their Qualified Allocation Plans (QAPs), which set local priorities, scoring systems and building requirements to determine the types of projects and levels of financing available for LIHTC projects. States including Arizona, Georgia, Kansas, Ohio, Oklahoma and Texas frequently update or reaffirm NGBS certification in their annual or multiyear draft QAP cycles.

Federal Level

Fannie Mae and Freddie Mac both offer preferential pricing and discounts on loan proceeds for multifamily properties that hold an active NGBS Green certification:

• Fannie-Green Rewards offers a 10-basis-point discount and up to 5% additional loan proceeds for properties that are upgraded and improved to meet NGBS Green certification after loan close.
• Freddie Mac's Green Up — a financing program under the Freddie Mac’s Green Advantage — allows multifamily property borrowers to increase eligible loan amounts by up to 50% (or 75% for Green Up Plus) of projected energy and water savings, and requires properties to achieve at least a 25% reduction in consumption.

NGBS Green works in tandem with these programs, qualifying properties with affordable units for preferential green pricing and better loan terms.

Although these examples show how the NGBS is being used today, its flexibility is designed to open doors to a range of possibilities for further incentivizing, promoting, and facilitating sustainable and high-performance building.

To learn more and get a jumpstart on these exciting benefits, download the 2025 standard for free.