You Must Register your LEED v2009 project by Halloween

LEED Rating System

Halloween activities often include carving pumpkins into jack o lanterns and trick or treating in costume, and this year on All Hallows’ Eve you should be registering your LEED project.

The end is near. October 31, 2016 is the last day to register a LEED version 2009 project.

Registration will close on that date and thereafter GBCI will only accept applications for projects pursuing LEED v4.  GBCI will continue to accept submittals for certification of those projects registered by that date and pursuing v2009 rating systems until June 30, 2021.

As new versions of the LEED rating systems are introduced, earlier versions are phased out. October 31, 2016 should come as a surprise to no one. This is arguably the third extension of the date when projects must use the LEED v4. The date is an extension from the originally proposed close date of June 1, 2015, announced in summer 2012 when the vote on “LEED 2012” (now LEED v4) was initially delayed. There will likely not be a crush of registrations at the end of October because many projects registered by the April 8, 2016 date, as I wrote in USGBC Making Significant Change to LEED when new projects registering for LEED 2009 were required to satisfy increased minimum energy performance thresholds.

USGBC’s website postulates, “What happens when you upgrade the world’s premier benchmark for high-performance green buildings?” And then proposes “it’s bolder, more specialized, and designed for a better user experience.”

Without delving into whether or not LEED v4 is better than earlier versions, (.. USGBC boasts that LEED v4 has 80% fewer forms when compared to LEED 2009), it is the uncertainties associated with this dramatically changed rating system that make it exceedingly aggressive, if not irresponsible, to not register every contemplated project now for the tried and true v 2009. There are 31,944 LEED certified projects listed in the GBIG database, but only 7 certified LEED v4 BD+C New Construction projects, since that new rating system was launched on November 20, 2013.

Appreciate that this is not necessarily a matter of first costs alone because as I wrote in LEED v4 Costs Demystified, you can deliver a LEED v4 certified building at minimal additional cost. However, with increasing numbers of governments imposing mandatory green building tied to LEED and more and more government incentives pegged to LEED, the uncertainties of only 7 certifications of v4 new construction projects must be taken into account.

Note that October 31, 2016 will also be the last day to register new projects under LEED for Homes v2008 and LEED for Homes Midrise Pilot.

If you want to upgrade a project to LEED v4, such can be accomplished through GBCI’s support team. Learn more about upgrading to LEED v4.

A complete compilation of LEED registration and certification deadlines are available here.

Halloween is scary for young children, but the uncertainties associated LEED v4 should be frightening to the real estate industry. Register your project for LEED v 2009 before All Hallows’ Eve.

As a reader of this blog, if you email me before the Greenbuild Convention and Expo, I will buy you a drink or a cup of coffee at an LA watering hole. I made a similar offer last year and had a great time meeting a lot of very fun people for drinks in DC. I hope to see you in LA beginning on October 5.

Cannabis Cultivation has Growing Environmental Implications

Cannabis Environmental

Cannabis cultivation is not new, but beginning in the 1990s when states began to legalize medical marijuana and recently as state laws evolved, decriminalizing and legalizing recreational use of cannabis, the burgeoning industry has brought with it environmental implications, including of water and energy use.

Energy consumption for cannabis cultivation can be incredibly significant and vary widely between different methods of growing but any way you measure it, it is huge. Anecdotally, last year in Boulder County, Colorado during the second quarter of 2015, a modest 5,000 square foot indoor cannabis facility was consuming over 29,000 kWh of electricity each month. A single family home in Colorado might be consuming about 630 kWh.

Water is also dramatic in cannabis production, as it can with other agricultural uses. Water consumption data for cannabis is scarce, but at least one scientific study determined that a mature cannabis plant can consume up to 22.7 liters of water per day in a 150 day growing season. By comparison, a wine grape plant uses approximately 12.64 liters of water per day.

Moreover, most governments have not begun to consider matters of pesticide and fertilizer use in cultivation, not mention matters of fungicides used in post growing production and much more. Tobacco in cigarettes is highly regulated, but ‘not so much’ for cannabis. And what is regulated by most jurisdictions today are matters of security surrounding cannabis but not environmental concerns.

Boulder County, in one of the few regulatory efforts to address increased cannabis production, created a requirement for renewable energy and an Energy Impact Offset Fund. Cannabis cultivation operations must either directly offset 100% of electricity and any natural gas, liquid fuel, bio‐fuel or propane consumption through a subscription in a Community Solar Garden, renewable energy generated on site, or equivalent approved by the Building Official or pay a monthly fee of 2.16 cents per kWh into the Energy Impact Offset Fund.

In Washington State, Mason County Public Utility District made the decision to have an electricity rate classification specifically for emergent legal cannabis producers and processors. The rate producers and processors pay falls between the small commercial and large commercial energy rates.

In Oregon the Cannabis Environmental Best Practices Task Force has approved recommendations expected to be presented to the legislature later this month. The draft report recommends:

(1) Support access to education and technical assistance related to best cultivation practices;

(2) Support the creation of voluntary third party certification programs;

(3) Encourage research into cannabis issues, including environmental best practices, health, and other aspects of the cannabis sector; and

(4) Investigate water regulations for small‐scale producers.

Should the legislature tackle these issues, Oregon may be the national model for environmentally friendly cannabis production, at this time when little regard has been given to environmental issues in the rapid expansion of legal cannabis.

PACE Bill Due in Baltimore City

PACE Photo e final

A public hearing is scheduled tomorrow on a Property Assessed Clean Energy (PACE) loan program ordinance in Baltimore City.

I have been quoted saying that PACE “could be bigger than anything in U.S. real estate since the invention of the glass window.”

PACE loan programs, where payments for energy efficiency, water conservation and renewable energy improvements to real estate are made through a building owner’s property tax bill are gaining acceptance nationally including being implemented across Maryland.

PACE state enabling statutes generally authorize local governments to engage private sector lenders to provide upfront low interest financing to property owners for qualified projects (e.g., HVAC system upgrades, photovoltaic systems, cool roofs, etc.), and to collect the repayment through annual assessments on the property’s real estate tax bill.  The term of PACE loans can be extended up to 20 years or more, often resulting in utility and other cost savings that exceed the amount of the assessment payment.

The concept is not new, but nationally including in Maryland, “residential” PACE programs were put on hold as a result of a directive in 2011 that Fannie Mae and Freddie Mac refrain from purchasing mortgage loans secured by properties with outstanding PACE obligations. However, as I wrote in this blog on July 24, 2016, HUD Jumpstarted Financing For Homes, reversing their previous position and now widely allowing residential PACE loans on top of FHA and VA loans (but still not on top of Fannie Mae and Freddie Mac loans).

The Department of Energy says that there are active commercial (as opposed to residential) PACE programs in at least 9 states and DC and enabling laws enacted or programs in development in another 23 states.

PACE offers a host of benefits as proposed in Baltimore, including: removing the barrier of a large upfront cash outlay by the property owner; allowing 100% financing of improvements in amounts over loan value ratios available in the marketplace, including without disturbing existing mortgage financing; underwriting tied to the property and improvements and not individual creditworthiness; repayment over a long period of time (up to 20 years); low interest rates resulting from high security of repayment; reduced utility bills that can offset the payments; the obligation to repay runs with the property and not the owner; the improved properties have an increased value, benefiting both the owner and the property taxing authority; the owner may be eligible to take advantage of federal, state and local tax incentives; under most commercial leases the PACE payment (on a property tax bill) can be passed along to the tenant avoiding the ‘split incentive’ problem; local government can facilitate the program with no direct debt obligation; and more.

Baltimore is proposing to allow the PACE financing of any equipment, device or material intended to improve energy efficiency, including in new construction (e.g., providing opportunities to separately finance the top 20% of a construction project or ..), from automated energy control systems and HVAC replacement to insulation of any wall or roof and replacement roofing or measure reducing water usage as well as any other installation or modification that is a utility cost saving measure.

In the event of a default, the amount in default (but not the entire principal of the PACE loan) is a liability that is a property tax lien collected by the local government with the priority associated with other real property tax liens, so existing mortgage holder consent to a PACE loan is required.

Commercial PACE programs are still very new. Despite enabling laws in 32 states (including forgone early residential programs) local enactments are also required and then the program must be created, including enticing lenders. Early programs were financed with a pooled revenue bond or for large projects a standalone bond, but today private lenders have entered the open market. While Sonoma County was an early innovator, Connecticut has a widely admired statewide green bank program that is up and running and it is the model for Maryland.

Maryland is typical. Its original PACE law enacted in 2009 was put on hold after the 2011 guidance from the federal government. Today, with SB 186, the current state enabling law passed in 2014, as tweaked by SB 173 earlier this year, the first commercial PACE program is now up and running in Montgomery County. Local laws are also on the books in Anne Arundel County, Howard County, Queen Anne’s County, and Garrett County where programs are being created. And legislation is scheduled for a vote in Frederick County on September 20 and in Baltimore County on October 3.

Today what is authorized in Maryland and elsewhere are only commercial programs and, generally, new state enabling laws are required to authorize residential PACE programs before they can be implemented by local governments.

A public hearing on Baltimore City Council Bill 16-0692 is scheduled for September 13. With 15 of the 17 City Council members as co-sponsors the bill is likely to be enacted despite the initial negative comments from the City Department of Finance.

The Baltimore bill was introduced at the request of CBJ Energy, a lender whose principals have strong PACE industry cred. There are at least half a dozen other lenders eager to provide the upfront capital for PACE loans in Maryland. The average building owner is desirous of reducing its utility bills. What is wanting in Maryland and in many places across the country are the property tax authority programs that authorize PACE lending.

PACE programs are great for the planet and awesome for business. It is clear that in 2016 there will be more of them across Maryland including hopefully in Baltimore and ideally across America.

New Federal Floodplain Regulations Rewrite 100 Year Floodplain

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The Federal Emergency Management Agency (FEMA) is proposing to rewrite the longstanding 100 year floodplain standard for federally funded projects such that most building would now have to be 2 feet freeboard.

In the name of resilience, reliability and green this proposed regulation will result in significant additional first costs for affected building.

FEMA is specifically proposing to amend 44 CFR part 9 “Floodplain Management and Protection of Wetlands” and issue a supplementary policy to implement the Federal Flood Risk Management Standard that was established by Executive Order 13690.

The nomenclature is important. It is a common misunderstanding that a 100 year flood is likely to occur only once in 100 years. A 100 year flood is a flood event that has a 1% probability of occurring in any given year. (In fact, there is approximately a 63.4% chance of one or more 100 year floods occurring in any 100 year period.)

Freeboard is a factor usually expressed in feet above a flood level for purposes of building above a floodplain. Today, building codes in many jurisdictions require construction be 1 foot freeboard.

And while there is much contained in the 37 page proposed rule as published in the Federal Register on April 22, 2016, that goes far beyond the 1973 National Flood Insurance Program purposes of protecting people and property from flood damage, now elevating the floodplain to a natural resource worthy of protection, there are 4 options proposed for federally funded building projects:

  1. construct 2 feet freeboard (above the 100 year floodplain); or 3 feet freeboard for “critical actions” (e.g., chemical storage facilities, hospitals, housing for the elderly, data centers, etc.); or
  2. construct above the 2% annual chance flood approach (also known as the 500 year flood); or
  3. construct “utilizing the best available, actionable hydrologic and hydraulic data and methods that integrate current and future changes in flooding based on climate science;” or
  4. construct above “the elevation and flood hazard area that result from using any other method identified” by FEMA.

Each of the options is described in great detail in the proposed rule.

FEMA makes the cost benefit analysis argument,

The up-front costs are generally only about 0.25 to 1.5 percent of the total construction costs for each foot of freeboard.

For example, adding 2 feet of freeboard to a new home might add $20 a month to the mortgage payment, or $240 per year. The resulting flood insurance savings could be more than $1,000 a year for a building in Zone AE (for instance, in a riverine flood zone not affected by wave action) and $2,000 a year in Zone VE.

Arguably the accelerating rise in sea levels exacerbated by those portions of the U.S. coast that are sinking (including the Chesapeake Bay region) imperil continued habitation along the coastline and while this proposal to construct higher is no doubt less expensive than pumps and raising sea walls, what is the efficacy for the rest of the nation that does not live on a coast?

There is no single entity that controls building in a floodplain. In 2012, in the name of resilience then Maryland Governor Martin O’Malley signed the “Climate Change and Coast Smart Construction” Executive Order directing all state funded building be 2 foot freeboard.

Be clear, this proposed rule is not only “An Inconvenient Truth” scaring people by showing Florida disappearing under rising seas, but also will increase the cost of construction in many projects across the country. Issued in response to an Executive Order without Congressional authority, the rule reads more like something written by a cultural anthropologist than a scientist. In point of fact, the House of Representatives passed an appropriations bill in May (House Amendment 197 to H.R. 2028) that may defund the underlying Executive Order including this proposed rule as Executive branch overreach.

Comments on the proposed rule must be received no later than October 21, 2016.

Vancouver Leaving LEED for Zero Emission Building Mandate, But ..

vancouver 2b

On July 13, 2016, the Vancouver City Council approved a Zero Emissions Building Plan that is among the most aggressive by any government with the stated purpose of reducing greenhouse gas emissions.

While much of the media attention has described that Vancouver is the first major city in North America to establish specific actions to achieve zero emissions in all new construction by 2030, what may be most significant is what is being implemented now.

Beginning now, all new City owned and Vancouver Affordable Housing Agency projects will be certified to the Passive House standard or an alternate zero emission building standard in lieu of certifying to LEED Gold. Since 2004, Vancouver required civic buildings be certified LEED Gold and the move to Passive House is dramatic. Additionally, the approved plan requires City staff to implement a “zero emissions policy” for all new City owned and VAHA building projects by 2018.

Maybe most significant, the Plan requires that any rezoning for privately owned development beginning in first quarter 2017 meet an as yet to be determined threshold that staff has suggested may require those newly permitted projects to reduce emissions by 70% when compared to 2007.

It is interesting that on average, 82% of new development in Vancouver is residential and less than 2% is office, so this new Plan, figuratively and literally, hits people where they live.

Unlike most places in the world, Vancouver’s electricity is already close to 100% renewable! Provincial legislation requires British Columbia’s grid to be supplied by a minimum of 93% renewable energy and the current mix is over 97% renewable and therefore has very low greenhouse gas emissions associated with it. As a result, while electricity conservation remains important (.. yes, using less renewables can be a good thing), the aim of this Plan to reduce greenhouse gas emissions fails on it face.

Because today the grid provided electricity to Vancouver is almost entirely renewable, there will be almost no greenhouse gas emission reductions to be gained from this major increase in first costs of construction.

This Zero Emissions Building Plan is not only unnecessarily aggressive on its face and bold in terms of a public policy mandating “very” low emissions building for all new construction in a City with 97% renewable electricity, but what possible rational basis is there for this arbitrary mandate that unreasonably impacts not only civic building but all construction in the City.

For the uninitiated, Passive House uses a set of design principles to attain a rigorous level of energy efficiency. A Passive building is designed to employ continuous insulation through its entire envelope without any thermal bridging and that building envelope is ‘extremely airtight’ preventing infiltration of outside air and loss of conditioned air. It employs the use of high performance windows (typically triple-paned) and doors. All of which can be wonderful when employed on a voluntary basis by an owner concerned about energy versus water use reduction, improved indoor air quality, or ..

Today already using over 97% renewable energy, would a more holistic approach to green building, like Vancouver’s just repealed LEED Gold standard, not have more efficacy for the residents of Vancouver and the rest of the planet?

Is California Going to Ban Cows in the Name of Climate Change?

cows grazing

The California Environmental Protection Agency Air Resources Board has issued a “Proposed Short-Lived Climate Pollutant Reduction Strategy” that includes the penultimate statement,

California’s dairy and livestock industries account for roughly half of the State’s total methane emissions and about five percent of the State’s overall GHG emissions. About half of the emissions from the State’s 5.5 million total beef and dairy cows come from enteric fermentation (mostly belching), and the other half from manure management practices, primarily lagoon storage of flushed manure from milking cows.

So, with targets on the backs of cows, “for dairies, California will aim to reduce methane emissions .. by at least 20 percent in 2020, 50 percent in 2025, and 75 percent in 2030.”

One of the many problems with that aim is California dairy cows already “produce low enteric fermentation emissions per gallon of milk“ .. (they belch less) when compared to other U.S. cows. So, the goal of further reducing methane emissions, such that “a gallon of California milk might be the least GHG intensive in the world” also means that it will be among the most expensive milk in the world.

The Proposal acknowledges the additional costs and advocates unproven strategies like new “gut microbial interventions” that lab test show have the potential to reduce enteric fermentation emissions 30% without affecting milk production, but those genetically modified organisms don’t sound like organic milk.

There are other bad alternatives. Argentina’s INTA governmental research body has developed cow backpacks that trap the Methane they belch in order to turn it into renewable energy.

The New York Times ran a story, on December 14, 2008, entitled, “Eat Kangaroos To Fight Global Warming” .. admittedly of all the ideas articulated to combat climate change, George Wilson of the Australian Wildlife Services may have the least intuitive – eat more kangaroos! Kangaroos don’t produce Methane. But there is a problem. Despite that some consider kangaroo a specialty meat, the reaction has not been positive to Skippy on the menu.

Or possibly California could leave the cows alone and concentrate on more realistic matters, like why it took 112 days to plug the leak from the Aliso Canyon storage facility that spewed more than 97,000 metric tons of Methane into the Los Angeles air in what was arguable the single largest source of pollution in the State last year.

The Federal government is not targeting cows in its new rules released in May to cut Methane emissions from the oil and gas industry.

So why pick on dairy cows? This is not even a save the planet by eating less meat initiative. The root of this Proposal was an October 16, 2014 rulemaking petition filed with the Air Resources Board by the nonprofit Animal Legal Defense Fund seeking to have the State regulate greenhouse gas emissions from animal agriculture. From that Petition spewed this Proposal.

This fall, Board staff will present the final strategy, which many expect will cut in half Methane emissions from dairy operations. Nearly a third of California’s 1,400 dairies, have less than 500 milking cows and it is not clear how they will survive the new regulatory strategy; but then that is the overarching goal.

It may not be long before consumers will be smuggling organic milk into California from Nevada and Arizona.

Attend Greenbuild – The Best Way To Grow Your Green Building Business

Greenbuild 2015

I am often asked, “how can I expand my green building business?” My answer is simple and the same response I have offered for years, attend the Greenbuild International Conference and Expo.

This year Greenbuild is in Los Angeles from October 5 – 7.

I do not claim any particular business marketing prowess, but Greenbuild has been the number one source of new clients for my sustainability and green building law practice!

I have been attending Greenbuild on and off over 13 years. Last year, Greenbuild 2015 was in Washington DC, just down the road from the first U.S. Green Building Council “Green Building Conference” (yes, pre Greenbuild) held in conjunction with the National Institute of Standards in Gaithersburg, Maryland in 1994 which had only 450 people in attendance. While attendance is off a bit from the huge Greenbuild in Boston in 2008 with 27,995 attendees, last year dwarfed the first Greenbuild in 2002 when 4,189 people gathered in Austin.

There were 19,058 attendees last year with 96 countries represented. 23% of those attending were from architecture or engineering firms, 13% were contractors and builders, 10% were utilities and 5% were manufacturers, not to mention the very large numbers of professionals offering services and consulting, including, yes, a large assemblage of real estate attorneys.

And Greenbuild is sustainable. USGBC reported in 2015, it upheld its commitment to offsetting 100% of our emissions (including attendee travel) through the purchase of Green-e certified offsets in partnership with TerraPass.

Last year there were 548 exhibitors on the 144,300 square feet Expo Floor. It is all but impossible not to encounter new vendors and innovative suppliers. Educational activities abound and there is a lot to learn, I most enjoyed attending the session, EPDs: State of the Art and Advancement by Industry, where one of the presenters was Heather Dylla, Director of Sustainable Engineering for the National Asphalt Pavement Association.

The 2015 demographics are the most recent proof that Greenbuild is the largest green building gathering each year and the best opportunity for networking among “green people.”

Greenbuild 2016 in LA will be “the” target rich environment for green people this year. It is your chance to meet incoming USGBC CEO Mahesh Ramanujam, the man to know in the post Fedrezzi era. And it all promises to be lots of fun. So register today.

It is only 50 days until this once a year opportunity to expand your green building business.

For those who will complain that this blog post is shameless promotion of USGBC, that may be true, but it is also correct that Greenbuild has been the number one source of new clients for my law practice for more than a decade!

Having fun is part of the Greenbuild experience. As a reader of this blog, if you email me before Greenbuild, I will buy you a drink or a cup of coffee at an LA watering hole. (I made a similar offer last year and had a great time meeting a lot of very fun people drinks in DC.) I hope to see you in LA on October 5.

Zika Virus and LEED Buildings – Redux

mosquito cdc dead

Given the large number of inquiries we have responded to about Zika, including about liability for building owners, this is a repost of an updated version of my February blog post on the subject.

Owners of LEED buildings should evaluate the need to apply pesticides, killing mosquitoes to protect occupants from the Zika virus.

Zika virus has swept through South and Central America, with more than a million suspected cases during the past few months, along with a substantial increase in reporting of infants born with microcephaly.

Although there needs to be a good deal of research to define critical aspects of infection, Zika is spread mostly by the bite of an infected aedes species mosquito. Unfortunately, mosquito control efforts have failed to curtail the spread of many similar pathogens, including dengue and chikungunya viruses, which are carried by the same aedes species and are spreading in the same countries currently affected by the Zika virus.

As of August 3, 2016, the Centers for Disease Control and Prevention advises there are only 6 confirmed “locally acquired mosquito born cases” of Zika, 16 sexually transmitted cases, and 1,818 travel associated cases in the continental U.S., there are 5,460 locally acquired cases in Puerto Rico, and those numbers will grow significantly because the mosquitoes that can carry Zika are found in increasing areas of the U.S. This public health crisis is not limited to the Wynwood neighborhood in Miami.

While removing standing water is useful and window screens have some limited productiveness, the only truly efficacious control of the deadliest creatures on the planet is the application of mosquito killing pesticides. My recent blog post, Wipe Out Zika Virus Carrying Mosquitoes with Pesticides describes three categories of pesticides for mosquito control in the curtilage of buildings.

With respect to the likelihood of legal liability associated with the application of insecticides or failure to apply, it is the failure to act properly that may have the greater likelihood for landlord liability. Admittedly the proximate cause related to a recognizable infection tying a particular mosquito bite to a specific building is remote. But where a building has an insect management plan, the negligent implementation of a plan may arguably give rise to liability. The law varies from state to state, but in an analogous situation most jurisdictions can find liability against a residential landlord in the event of a dog bite where there is a ‘no dog’ policy at the premises that is not enforced by that landlord. Similarly landlords are being increasingly held liable for injury arising from bedbug infestations.

Many LEED buildings have insect management plans (.. while most non LEED buildings do not). In fact, 53% of LEED EBOM-2009 certified existing buildings have achieved the SSc3: Integrated Pest Management, Erosion Control, and Landscape Management credit. Those 1595 of the 2971 LEED existing building certified projects in that rating system achieved this credit that requires a written plan to manage insects.

The intent of the LEED credit is “to preserve ecological integrity, enhance natural diversity and protect wildlife ..”.

The credit requires outdoor Integrated Pest Management (IPM), defined as “managing outdoor pests (plants, fungi, insects, and/or animals) in a way that protects human health and the surrounding environment and that improves economic returns through the most effective, least-risk option. IPM calls for the use of least toxic chemical pesticides, minimum use of the chemicals, use only in targeted locations, and use only for targeted species.”

The text of the LEED credit requires universal notification to all building occupants not less than 72 hours before a pesticide is applied in a building or on surrounding grounds under normal conditions, and within 24 hours after application of a pesticide in emergency conditions.

It is not that a LEED certified building has an increased likelihood of liability arising from Zika, but rather it is that any building owner with an announced insect management plan may trigger liability.

Across most of U.S., building owners with insect management plans can mitigate risk by making certain those plans are appropriate and correctly implemented given what we know about Zika and other mosquito borne illnesses, considering the application of insecticides, including applying pesticides to kill mosquitoes.

Moreover, when even E. O. Wilson, the well known evolutionary biologist and a champion of biodiversity, argues that the aedes mosquito should be targeted, its DNA preserved and the species wiped out, building owners should do the right thing in protecting their occupants by applying mosquito killing pesticides.

Historic Church Appeals to Higher Authority in Solar Dispute

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The First Parish in Bedford, Unitarian Universalist church has appealed from a decision of the Historic District Commission of the Town of Bedford that denied First Parish’s application for a certificate of appropriateness to install solar panels on its Meetinghouse roof.

The complaint filed Superior Court for the County of Middlesex, Commonwealth of Massachusetts claims the decision exceeds the authority of the Commission, was legally untenable, unreasonable, arbitrary and capricious, and violated the rights of the members of First Parish to the free exercise of their religious beliefs under Article II of the Massachusetts Declaration of Rights and the First Amendment of the U.S. Constitution.

First Parish was established, and its first Meetinghouse was erected, in 1729, shortly after incorporation of the Town of Bedford. The original Meetinghouse was badly damaged in the “great gale” of September 1815, and was replaced by the present Meetinghouse in 1817. The 1817 Meetinghouse was built in the Federalist style based upon a design by noted American architect Asher Benjamin. Portions of the First Parish Meetinghouse maintain their historic appearance, but others do not.

Over the years, as technology has advanced, building codes, construction materials and standards, and the needs of First Parish relative to the Meetinghouse have evolved, there have been multiple alterations to the original design and structure of the Meetinghouse that would be utterly unrecognizable to a parishioner of the church at the time of its construction in 1817.

The current gray asphalt roof shingles on the Meetinghouse have no historical significance. Until 1954 the roof shingles were wooden. In 1991 the Commission approved replacing the shingles on the cupola dome with “lead-coated copper”. In 1999 the Commission approved replacing wooden louvers in the bell tower with fiberglass louvers. And in 2001 the Commission approved replacing wooden louvers in the steeple with fiberglass louvers to match those in the cupola.

Early followers of the Unitarian church included seminal figures of the New England transcendentalist movement, such as Henry David Thoreau and Ralph Waldo Emerson.

In modem times, adherence to the church’s Seven Principles necessarily has involved confronting and mitigating evolving environmental threats, including climate change. As such, Unitarian Universalists across the nation believe that their religion necessarily involves taking action on a personal, congregational and community level to confront and mitigate mankind’s role in causing and exacerbating global warming.

First Parish applied to the Historic Commission for a certificate of appropriateness to construct the solar panels on its roof, and the Commission began the public hearing on April 6, 2016. In a decision that is being widely criticized as what is worst about allowing preservation to trump environmental stewardship, the Commission ultimately denied the application on June 1, 2016.

The complaint filed on June 27, 2016 says the Commission decision was unreasonable, whimsical, arbitrary and capricious in multiple respects including that no member of the public opposed the First Parish solar panel proposal and the evidence supporting the proposal was overwhelming.

The government’s responsive pleading is not due for some weeks, but most commentators expect the nearly 300 year old church of Henry David Thoreau will prevail and the court will annul the decision of the Historic District Commission.

HUD Jumpstarts PACE Financing for Homes

Residential PACE 000

Last week the U.S. Department of Housing and Urban Development and the Department of Veterans Affairs released new guidance, changing their previous positions, now widely allowing residential Property Assessed Clean Energy (PACE) financing.

With the guidance, PACE financing, where payments for energy efficiency, water conservation and renewable energy improvements to real estate are made through a building owner’s property tax bill without upfront cash from the owner could be bigger than anything in U.S. real estate since the invention of the glass window.

PACE state enabling statutes generally authorize local governments to work with private sector lenders to provide upfront low interest financing to property owners for qualified projects (e.g., HVAC system upgrades, photovoltaic systems, cool roofs, etc.), and to collect the repayment through annual assessments on the property’s real estate tax bill.  The term of PACE financing can be extended up to 20 years, often resulting in utility and other cost savings that exceed the amount of the assessment payment.

The concept is not new, but nationally, residential PACE programs generally have been put on hold or foregone as a result of concerns of HUD and the Federal Home Loan Banks, that issued a directive in February 2011 to refrain from purchasing mortgage loans secured by properties with outstanding first lien PACE obligations.

There were not similar concerns expressed about commercial loans. However, the extent to which similar concerns apply to multi family commercial mortgages was not previously resolved. And the uncertainty has resulted in modest commercial PACE programs in only 9 states and next to no residential programs actively running. A directory of state and local PACE laws in available here.

Residential PACE offer a host of benefits depending upon the program design, including: removing the barrier of a large upfront cash outlay by the property owner; allowing 100% financing of improvements in amounts over loan value ratios available in the marketplace, including without disturbing existing mortgage financing; underwriting tied to the property and improvements and not individual creditworthiness; repayment over a long period of time (often up to 20 years); low interest rates resulting from high security of repayment; reduced utility bills that can offset the payments; the obligation to repay runs with the property and not the owner; the improved properties have an increased value, benefiting both the owner and the property taxing authority; the owner may be eligible to take advantage of federal, state and local tax incentives; local government can facilitate the program with no direct debt obligation; and more.

Under this July 19, 2014 guidance in the event of a default on a residential property PACE loan, the liability is a property tax lien collected by the local government with the priority associated with other real property tax liens. Sort of. The “grand compromise” announced in the guidance is actually a restatement of what exists in current commercial PACE programs. The guidance describes it as,

the property may only become subject to an enforceable claim (i.e., a lien) that is superior to the FHA-insured mortgage for delinquent regularly scheduled PACE special assessment payments. The property shall not be subject to an enforceable claim (i.e., lien) superior to the FHA-insured mortgage for the full outstanding PACE obligation at any time (i.e., through acceleration of the full obligation.)

Which, in Federal government speak, means only the dollar amount of delinquent PACE payments take priority over existing mortgages, not the full amount of the PACE loan. Again, this would be a big deal except for the fact that most State commercial PACE programs are already structured this way.

What is huge is that the HUD and VA block is now lifted on residential PACE financing for energy efficiency, water conservation and renewable energy improvements to homes.

PACE loans can provide the capital to green the existing building stock. This change in Federal policy can jumpstart green building in the U.S.

Existing state programs will have to be reviewed to see if new legislation is required; it may not in many states where there are never implemented programs on the books. And local governments will need to adopt and implement residential programs, including attracting lenders to their jurisdiction. There will be a lot of competition in this space and well drafted local government legislation will be key to the efficacy of PACE programs.

PACE programs are good for the planet and good for improving the housing stock. This dramatic shift in Federal policy will result in significantly more PACE loans, including residential PACE loans across the country.

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