A bill passed by the New York state legislature and signed into law by Governor Andrew Cuomo last month could provide a powerful incentive for builders and developers to go green.

Under the new law, New York municipalities may pass legislation authorizing property-tax exemptions for green buildings, renovations, improvements, and other projects, starting in 2013. The bill offers up to 10 years of property-tax exemptions for construction and improvements within any municipality that enacts legislation mirroring the bill.

The level of exemption corresponds to the level of LEED certification or other similar green certification achieved for each project. For a project that receives LEED Silver certification, the bill offers a 100-percent property tax exemption that tapers off by 20 percent each year for the following five years. (In the building's fourth year, the exemption rate would be 80 percent; in its fifth year, it would be 60 percent; and so on.)

Buildings or restorations with higher LEED certifications may enjoy longer property tax exemptions. Projects certified LEED Gold in a municipality that enacts the bill will enjoy a 100-percent exemption for four years, before tapering off 20 percent each year. LEED Platinum–certified projects could be 100-percent exempt for six years.

The value of green construction or renovation must exceed $10,000 for the law to apply; normal repairs and maintenance will not pass muster. "Such exemption shall be to the extent of any increase in assessed value resulting from the construction or reconstruction of a property meeting LEED certification," the bill further states.

Only projects begun in or after January 1, 2013, will be eligible.