179D Tax Deduction Brought Back to Life in the Tax Extenders Bill

Last night the 113th Congress passed the Tax Increase Prevention Act, better known as the tax extenders bill, when H.R. 5771 passed the Senate 76 to 16. President Obama is expected to sign the bill into law later this week. 

And while this legislation is significant, it should be lost on no one that the bill expires 14 days from now on December 31, 2014, and, as such is only applicable to the 2014 tax year. Each of the tax provisions in the bill had previously expired at the end of 2013.

For those interested in green building, the most important tax provision extended in the bill is the 179D energy efficient commercial building deduction that had expired on December 31, 2013. The bill retroactively brings the deduction back to life, simply providing:

SEC. 158. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

(a) IN GENERAL. - Subsection (h) of section 179D is amended by striking ‘‘December 31, 2013’’ and inserting ‘‘December 31, 2014’’.

(b) EFFECTIVE DATE. - The amendment made by this section shall apply to property placed in service after December 31, 2013.

Using the 179D deduction, building owners and tenants who make expenditures to cause new or renovated commercial buildings to be more energy efficient will again be eligible for a significant Federal tax deduction, an immediate one time depreciation deduction of up to $1.80 per square foot.

Significantly, with the LEED 2009 prerequisite of a 10 percent improvement in the proposed building performance rating for a new building compared with the baseline in Appendix G of ANSI Standard 90.1-2007, many if not most LEED 2009 certified buildings may be eligible for this tax deduction. It is curious that despite the benefit to green building, the U.S. Green Building Council and others in the environmental industrial complex had throughout the year lobbied, unsuccessfully, to have the deduction replaced with some performance based tax credit. Those efforts were not supported by real estate interests. And the valuable deduction has now been extended, without modification, just as it has existed.

You can review the text of H.R. 5771 for the list of 54 other tax extenders which might affect you.

Others may offer commentary on the efficacy of tax policy by extenders a year at a time, but the purpose of this blog post is to make you aware that a bipartisan effort by Congress has greatly advantaged green building by extended the 179D energy efficient commercial buildings deduction.   

ICC 700 Authorized by National Defense Authorization Act for 2015

While many have focused on the funding to fight the Islamic State terrorist group or the 1 percent boost in military pay, the National Defense Authorization Act for 2015 makes a major change in green building across this nation when it authorizes use of the ICC 700 National Green Building Standard

Congress has passed and this week President Barack Obama is expected to sign H.R. 4435 which is the comprehensive legislation to authorize the $584.2 Billion budget authority of the Department of Defense.

To appreciate the impact that the Department of Defense has on the real estate industry, of that budgeted amount over $20 Billion will be spent on housing in 2015. And the military directly impacts green building. This time last year, I wrote a blog post Defense Authorization Act Lifts Ban on LEED Gold and Platinum.

This year, on page 694 of the 786 page bill, section 2802 Residential Building Construction Standards, provides,  

All residential buildings funded, planned, remodeled, or authorized by this Act that will be designed and constructed to meet an above code green building standard or rating system may use the ICC 700 National Green Building Standard, the LEED Green Building Standard System, or an equivalent protocol which has been developed using a voluntary consensus standard, as defined in Office of Management and Budget Circular Number A–119.

Presumably that language also authorizes the use of Green Globes.

The National Association of Home Builders and the International Code Council partnered to create the ICC 700 National Green Building Standard. The ICC 700 can be used by any builder for their individual project as a rating system (including third party approval), or be the basis for a government residential green building code.

The Air Force, Army, Marines, Navy and other instrumentalities of the Department of Defense are the largest owner of residential buildings in North America. So, this is good news for green building, but maybe not such good news for the U.S. Green Building Council that will see the market share of its already beleaguered residential systems shrink in 2015 and beyond.   

2015 IgCC Has Been Approved

On November 14, the International Code Council announced that the 2015 version of the International Green Construction Code had been approved.

News of the approval has not circulated widely, likely in part because the announcement was a bit cryptic when the ICC press release reported “the 2014 Group C code development cycle results.” 

Following a nearly two year voluntary consensus process, the updated IgCC includes those items that were raised at the Committee Action Hearings held in Memphis in April of this year. Each proposed change from the 2012 version of the green code was again considered at the Public Comment Hearings held in Fort Lauderdale in early October, which was followed with the first ever ‘online’ governmental consensus vote that concluded at the end of October. And the final action in the process was announced two weeks later when the ICC Validation Committee certified the vote results.

Those approved changes from the 2014 code change cycle will be published as the 2015 IgCC.

For those who cannot wait for the print of the 2015 IgCC that will be available in February 2015, click here for a comprehensive list of each change from the 2012 edition that was the final action.

The 2015 IgCC creates a regulatory framework for new and existing buildings, establishing minimum green building requirements for buildings and complementing voluntary rating systems, like LEED. The 2015 version of this form code ratchets up, significantly, the energy performance requirements from the current version. And with the delays associated with LEED v4, observers have suggested that a building constructed to this new code will be greener than a LEED 2009 building.  

The 2015 IgCC acts as an overlay to the existing set of International Codes, including provisions of the International Energy Conservation Code and ICC 700 - the National Green Building Standard; and incorporates ASHRAE Standard 189.1 2014 as an alternate compliance path.

The earlier versions of the IgCC were not widely adopted. Only very limited number of jurisdictions mandate new construction and renovation of both private and public buildings must be green. And after the 2014 mid-term elections, many of today’s newly elected conservatives appear to believe that a voluntary, non-mandatory approach to environmental protection is the best hope for stewardship of our planet. It is that same belief that has led to the broad brand and wide market share acceptance of LEED as a voluntary green building rating system. So, the future of a mandatory IgCC remains in question.

This may also be the last time the ICC utilizes a voluntary consensus process for drafting the IgCC. In August the ICC, ASHRAE, the American Institute of Architects, the Illuminating Engineering Society of North America, and the U.S. Green Building Council announced the signing of a memorandum to collaborate on the development of future versions of the IgCC. And while that coterie of groups collaborated in the past, there is concern that future agreements between the groups, including agreements to exchange money, may color future versions of this green code.

ASHRAE 189.1 - 2014 Green Building Standard Is Now Available

Last week the 2014 version of the ASHRAE 189.1 Green Building Standard was published and became available for use. 

ANSI/ASHRAE/USGBC/IES Standard 189.1-2014, Standard for the Design of High-Performance, Green Buildings Except Low-Rise Residential Buildings, addresses site sustainability; water-use efficiency; energy ef­ficiency; indoor environmental quality; and the building’s impact on the atmosphere, materials and resources. 

Standard 189.1 is an alternative compliance option of the International Green Construction Code. When Baltimore City adopted the IgCC last week, its enactment expressly described that buildings designed in compliance with Standard 189.1 were exempt from compliance with the IgCC. Given the timing of the enactment, Baltimore adopted the December 2011 version of 189.1.  

The 2014 standard incorporates 67 addenda, reflecting changes made through the public review process since the standard was last published in 2011. Appendix H gives brief descriptions and approval dates of the addenda included in this new edition.

According to ASHRAE, major changes in the 2014 edition include:  

  • Energy: Significant updates are included to reflect the publication of Standard 90.1-2013, Energy Standard for Buildings Except Low-Rise Residential Buildings, including revised building envelope provisions. Fenestration orientation requirements were updated based on new research, as well as changes and updates made to equipment efficiency tables, ENERGYSTAR references and continuous air-barrier requirements.
  • Energy Performance, Carbon Dioxide Emissions, and Renewables: Changes and clarifications are included to reflect changes to Standard 90.1. Carbon dioxide emission factors for different energy sources are updated.
  • Indoor Environmental Quality: Lighting quality is added to the scope of this section, and requirements are added for lighting controls in specific space types. Requirements for air sealing of filtration and air-cleaning equipment are clarified, and new requirements for preoccupancy ventilation and building envelope moisture management are added.
  • Site Sustainability: All site requirements are now mandatory, with prescriptive and performance options moved to the mandatory requirements. Requirements for stormwater management are enhanced, and new requirements added for bicycle parking and for preferred parking for low-emission, hybrid and electric vehicles. New requirements are added for predesign assessment of native and invasive plants.
  • Water: More stringent water use requirements are included for toilets, clothes washers, dishwashers and green roofs.
  • Building Impacts on the Atmosphere, Materials, and Resources: Requirements are updated for areas to store and collect recyclables, including batteries and electronics. Requirements also are updated for construction waste management and for life-cycle assessment. New requirements are added for multiple-attribute product declaration or certification and for maximum mercury content levels of certain types of electric lamps.
  • Construction and Plans for Operation: Requirements related to environmental impacts associated with idling construction vehicles are updated. New requirements are added to reduce the entry of airborne contaminants associated with construction areas.

To appreciate the importance of a republished ASHRAE 189.1,  note that the Department of Defense, the largest owner of buildings in North America, that is also the owner or more green building and more LEED certified building than anyone else, based its Unified Facilities Criteria 1-200-02 High Performance And Sustainable Building Requirement on 2009 version of the Standard.

This may also be the last time the ASHRAE publishes 189.1 as an independent standard. In August the International Code Council, ASHRAE, the American Institute of Architects, the Illuminating Engineering Society of North America, and the U.S. Green Building Council announced the signing of a memorandum to collaborate on the development of future versions of Standard 189.1.

To order Standard visit www.ashrae.org/bookstore

International Green Construction Code Now Mandatory For All Building in Baltimore

Last evening the Baltimore City Council adopted the International Green Construction Code 2012 as an overlay to the City’s building, fire and related codes.

Baltimore, the 26th most populous city in the country, was among the first jurisdictions, in 2007 to mandate that all “newly constructed, extensively modified non-residential buildings” .. “achieve a Silver rating in the appropriate LEED rating system or satisfy the Baltimore City Green Building Standard” (a LEED-like local enactment). That mandatory law had some efficacy with new construction but almost no market impact on renovations as building owners strived to avoid the enactment. 

Council Bill 14-0413 repeals that existing law and commencing April 1, 2015 expands its scope and breadth with a new Baltimore Green Construction Code to apply to all new construction and “all repairs, additions, or alterations to a structure and all changes of occupancy” with very few exceptions (.. one or two family dwellings, etc.).

Significantly, the new Green Code does not apply to: structures that achieve a LEED Silver rating; residential and mixed use buildings of five stories or more that comply with the ICC 700 at the Silver performance level for energy and Bronze level for other categories; and, to structures that comply with ASHRAE standard 189.1. The new enactment allows the Code official to accept third party certification of compliance with these alternative compliance paths; and our law firm will provide those certifications.

There is an exemption process where the Code official may, in unusual circumstances and upon a showing of good cause, grant an exemption from any specific requirement of the Code.

Sensitive that the port of Baltimore, founded in 1729, is an already built-out older industrial city that has shifted to a service economy, the new Green Code alters the form IgCC with 32 pages of edits, including that it requires “at least 50% of the total building materials used” in a building of 25,000 square feet or greater, must be recycled, recyclable, bio-based or indigenous (within 500 miles), where the form code threshold is not less than 55% of buildings of all sizes.

And the enactment corrects some of the industry bias in the form IgCC when, in pursuit of heat island effect mitigation, Baltimore permits the use of “porous asphalt pavement” in addition to pervious concrete. The form code all but bans asphalt pavement in favor of concrete products (i.e., when the IgCC 2012 mandates heat island mitigation for not less than 50% of site hardscape with material as having a solar reflectance value of not less than 0.30 [.. think light colored concrete and not dark colored asphalt]).

In a first for any American city, buildings are now mandated to have renewable energy systems.

Both with the sunsetting of the Baltimore City Green Building Standard (the green standard that most residential projects pursued in recent years) and that this new Green Code applies to all repairs and renovations (not subject to the prior law), whichever compliance path a builder pursues, will be a sea-change.

While there are co-sponsors, the bill is all but the singular and Herculean effort of Councilman James Kraft. It is rare that a code enactment is not an executive branch bill. And the Councilman’s commitment to the environment is further evidenced by the fact that last evening the City Council also had before it his bill to ban plastic bags.

As progressive as this bill is, it should not be lost that Baltimore is representative of a very limited number of jurisdictions mandating new construction and renovation of both private and public buildings must be green. After the 2014 mid-term elections, many of today’s newly elected conservatives believe that a voluntary, non-mandatory approach to environmental protection is the best hope for stewardship of our planet. It is that same belief that has led to the broad brand and wide market share acceptance of LEED as a voluntary green building rating system. But Baltimore has had a mandate on the books since 2007, so, while there are not 50 shades of green, with alternative compliance paths for achieving green building, this bill is being viewed favorably.

Mid Term Election Results Superb For Green Building

Election Day 2014 in which Republicans made big gains in Congress and statehouses across the country portends huge business opportunities for green building.

As more conservative legislative bodies look to enact environmental and energy policies while driving up growth without enacting new mandates or imposing new taxes, enabling voluntary green building is positioned to be part of the new legislative agendas. 

The newly elected Republicans are not 1960s Barry Goldwater environmentalists who favored “federal intervention with regards to the environment.” To the contrary, most of today’s newly elected conservatives believe that a voluntary, non-mandatory approach to environmental protection is the best hope for stewardship of our planet. And that is the same belief that has led to the broad brand and wide market share acceptance of LEED. Many believe that burdening business and land owners with yet more government mandates is wrong and will not be efficacious.

The broad failure of the IgCC to be enacted anywhere suggests a building code that goes far beyond life safety is going too far. Further, the fact that ASHRAE 189.1 has only been implemented by the U.S. military is equally damning. Mandatory green codes and green standards will not be popular in conservative legislative bodies.  

Additionally, attempting to mandate that a private land owner must build a LEED or Green Globes certified structure misuses the voluntary rating systems. David Gottfried, the USGBC co-founder who unabashedly believes “all building should be green” said in a recent interview, “LEED was designed as a voluntary standard” acknowledging that “some governments have grabbed onto it.” And Jerry Yudelson, the President of GBI (the Green Globes folks), makes clear he does not advocate mandatory green building laws for private building and he sees “a benefit of allowing the freedom of the marketplace to control this rapidly changing field, where performance counts.”

As transition teams for newly elected officials look for environmental and energy policies that will be no cost to government and not burden business, the environmental industrial complex needs to advocate for government policies that allow and incentivize sustainability and green building (including the resultant reduced electricity use, savings in potable water, less solid waste, eliminating toxics, and more). It is time to stop ridiculing people, who are now in control of Congress and many state legislatures, as climate change deniers (making it a moral issue equating them with Holocaust deniers). And it is time to reconsider the abject failure to of the green building community to articulate the advantages of building sustainability that has resulted in green building no longer being the cool kid.    

Not only is green building a solution to many of the environmental impacts arising from human activity, but from an economic perspective it is clear that green building is profitable. There is nothing wrong with making a profit while saving the planet.

These elections have presented an opportunity for the green building industry to thrive.

Green building policies that promote innovation and create an environment rich for investment in real estate can save both mankind and its current way of life; and we all can get wealthy building green. 

FTC Warns 15 Businesses that their Biodegradable Claims May be Deceptive

The Federal Trade Commission made public that its staff sent letters to 15 businesses last month warning that their biodegradable claims related to “oxodegradable” plastic waste bags may be deceptive. 

Oxodegradable plastic is supposedly made with an additive intended to cause it to degrade in the presence of oxygen. Most waste bags are intended to be deposited in landfills, however, where not enough oxygen likely exists for oxodegradable bags to completely degrade in the time consumers expect. Contrary to the marketing, these bags may be no more biodegradable than ordinary plastic waste bags when used as intended.

“If marketers don’t have reliable scientific evidence for their claims, they shouldn’t make them,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Claims that products are environmentally friendly influence buyers, so it’s important they be accurate.”

The FTC staff notified 15 marketers that they may be deceiving consumers based on the agency's 2012 revisions to its Guides For the Use of Environmental Marketing Claims (the Green Guides). Based on studies about how consumers understand biodegradable claims, the Green Guides advise that unqualified “degradable” or “biodegradable” claims for items that are customarily disposed in landfills, incinerators, and recycling facilities are deceptive because these locations do not present conditions in which complete decomposition will occur within one year.

The FTC says it advised the businesses that buyers understand the terms “oxodegradable” or “oxo biodegradable” claims to mean the same thing as “biodegradable.” Staff identified the 15 businesses as part of its ongoing review of green claims in the marketplace.

The businesses are requested to respond to the warning letters and tell the staff if they will remove their oxodegradable claims from their marketing or if they have competent and reliable scientific evidence proving that their bags will biodegrade as advertised.

Despite that the information in this blog post was provided by the FTC, the staff is not disclosing the recipients of the letters.

The FTC expressly noted when providing this information that businesses who did not receive a letter should not assume that their claims are fine. The FTC has since the 2012 release of the updated Green Guides stepped up enforcement of environment claims from the use of renewable energy to VOCs in coatings, and more. 

LEED v4 Delayed, Again

The U.S. Green Building Council has announced that projects will still be able to register under the current LEED 2009 through October 31, 2016.

News of the extension of LEED 2009 began circulating yesterday and is being heralded and widely supported as positive across the environmental industrial complex. 

This is arguably the third extension of the date when projects must use the new LEED v4. The date is an extension from the close date of June 1, 2015, announced in summer 2102 when the vote on “LEED 2012” (now LEED v4) was delayed.

In USGBC’s announced 3 year cycle for updated LEED, 2015 would have been the third year and next version of the green building rating system was expected. Instead, USGBC continues to work on v4 and in particular on the v4 Materials and Resources credits.

It is important to appreciate this delay in the context of what else is going on in green building. In early 2015 the new and 2015 International Green Construction Code will be available, an updated ASHRAE 189.1 will be published, the new ICC 700 National Green Building Standard will be approved, and there will be a 2015 Enterprise Green Communities Criteria. 

Recall USGBC announced in July 2013 that LEED v4 had been approved by an affirmative vote of more than 86% of those in the consensus body of members. v4 officially launched in November 2013 at the USGBC Greenbuild Conference and Expo in Philadelphia and projects have been able to register under v4 since that time.

And while there are over 57,000 commercial projects participating in LEED, comprising more than 10.5 billion square feet of construction across 50 states and 149 countries, data available from GBIG shows there are only 253 registered LEED 4v projects across all the ratings systems and only 9 certified v4 projects.

There remains uncertainty over the still pending several appeals from the vote approving LEED v4 and this extension no doubt had a lot to do with that.

A great deal of attention was garnered at Greenbuild last week by the announcement of a new USGBC Supply Chain Optimization Working Group (with the members to be announced later, .. likely in early November) that will strive to perfect the LEED v4 Materials and Resources credits as part of the USGBC and American Chemistry Council joint initiative. Much of the chatter at Greenbuild was that the EPDs and HPDs were too far out in front of good science and that a step back was necessary. There is much speculation that it is the contemplated overhaul of the Materials and Resources credits that are driving this v4 delay.

Observers should not overread this announcement. It is clear that LEED v4 will be a hugely positive advancement. And LEED is going to thrive.

Read the USGBC press release here.

In light of this 18 month extension, it is now necessary that developers and builders of projects planned to break ground through 2016 evaluate if that building is better registered under LEED 2009 or v4? And beginning immediately, green building industry contract documents must be modified to anticipate v4, and a rewritten and new series of Materials and Resources credits. 

Greenbuild: Designing the Perfect Green People

The USGBC’s annual Greenbuild Conference and Expo in New Orleans wrapped up last Friday and the question I am most asked is, “what was the highlight?”

My response is that the highlight at Greenbuild was the 17,507 ‘green’ building people in attendance. 

I was in an education session watching presenter on the LEED materials credits talk about ‘cradle to cradle’ while Bill McDonough (the author of one of the most important environmental manifestos of our time, “Cradle to Cradle: Remaking the Way We Make Things”) was leaning against the wall in the back of the room.

Bob Berkebile, principal of BNIM Architects and winner of this year’s Hanley Award for Vision and Leadership In Sustainability (a founder of AIA’s Committee on the Environment and founding member of USGBC) was in the halls and on stage admonishing us that “we are on the brink of screwing up 3.5 billion years of evolution.”

I listened to Jerry Yudelson (President of Green Building Initiative, the organization behind the Green Globes rating system) joined Tristan Roberts (LEEDuser editorial director), in a public conversation about Green Globes in the LEEDuser booth on the Expo floor among 552 exhibitors spread over 142,000 square feet.

I was pleased that so many clients and friends took me up on my offer and joined me early each morning for a cup of coffee, beignets and good conversation at Café Du Monde.

And thousands of other green people earned a total of 37,250 hours in continuing education credits attending more than 240 sessions about how the build, grow and monetize green building. It is clear that green building is thriving.

Arguably among the more important substantive discussions was at the session lead by Brendan Owens about the ICC, ASHRAE, AIA, IES and USGBC agreement to collaborate on the development of future versions of 189.1, the IgCC and LEED.

A lot of attention was garnered by the announcement of a new USGBC Supply Chain Optimization Working Group that will work to perfect the LEED v4 Materials and Resources credits as part of the USGBC and American Chemistry Council joint initiative.

And many attendees were interested in the several presentations on retail market penetration and the report LEED In Motion: Retail.

Scot Horst generated a lot of excitement throughout the conference talking about the LEED Dynamic Plaque.

And while we all know the use of LEED outside the U.S. continues to grow rapidly, we were told at the closing plenary session that an international project in being LEED certified every 8 hours. That is market transformation and business opportunity.

New Orleans was a great place for a fun conference. And it is clear Greenbuild 2015 in Washington DC will be the target rich environment for green people next year. I will see you there .. 

I have been trekking and mountaineering in Tibet

I am writing this blog post from the Yak & Yeti hotel in Kathmandu. As some regular readers of this blog have commented, there has been a brief hiatus in my postings. For the last many weeks I have been trekking and mountaineering in Tibet.

At the beginning of this wonderful adventure, I had an opportunity to meet with green building clients and friends in Beijing and tomorrow I will meet with clients in Delhi before making my way back to Baltimore. China and India each are huge markets for sustainable building.

Although admittedly, I spent most of the past month climbing on the highest and largest plateau in the world (.. and not working), surrounded by the Himalayan mountains in all directions. 

In 1981 the climber and writer Galen Rowell made his first journey to Tibet and the northern side of Mount Everest (.. the first time Americans had been allowed into the Tibetan backcountry). In his magnificent book “Mountains of the Middle Kingdom” Galen described seeing hundreds of snow peaks in all directions, a vision off the scale of human experience, .. “I saw distant peaks that looked Everest-sized. They rose on the horizon behind an ocean of lesser whitecaps, .. more miles of more jagged peaks, with a greater feeling of height, than anything I knew existed on the planet.”

In the last many days I also have been awed by those same views and the opportunity to experience both the spiritual nature of the place and stunning views of the planet’s highest mountains making clear why Tibet is referred to as the roof of the world.

Regular blog posts will resume in the coming days, and ..

I will be in New Orleans attending the USGBC’s Greenbuild convention and expo next week. As a reader of this blog, if you email me, I will gladly buy you a cup of coffee and beignet at Café Du Monde.

Saint Paul has an Alternative to LEED

Much has changed, but much has remained the same, in the arena of green building law mandates since March 18,2002, when the city of Normal, Illinois enacted Ordinance 4825, the first ever mandatory green building law, requiring LEED certification in the Central Business District for public or private new construction of over 7,500 square feet.

Many thought green building mandates would spread across the county. But today, with more than 89,000 local governments across the U.S., there are less than 200 green building mandates that apply to ‘purely’ private building. 

Among the most progressive and unique of those green building laws is the Saint Paul sustainable building policy applicable to government building and private construction receiving public money. Saint Paul has the audacious goal of wanting “to be the most livable city in the United States.”

First effective in 2004 and modified several times, today the Saint Paul law applies to any new construction project receiving more than $200,000 in City or other governmental funding programs. The developer must choose for the project one of the following rating systems and levels with which to minimally comply:

Commercial Projects: LEED New Construction, Silver certified; or Green Globes, 2 globes awarded; or State Guidelines Building Benchmarking and Beyond (B3) compliant; or Saint Paul Port Authority Green Design Review (as applicable).

Residential Projects: LEED for Homes or LEED NC, Silver certified; or Minnesota Green Star, Silver awarded; or Green Communities, Minnesota Overlay compliant.

The last 6 commercial projects subject to the law each selected to comply with the B3 Guidelines.

The B3 Guidelines for both new buildings and major renovations: Exceed the state energy code by at least 30 percent, focus on achieving the lowest possible lifetime costs, encourage continual energy conservation improvements, include air quality and lighting standards, create and maintain a healthy environment, facilitate productivity improvements, and specify ways to reduce material costs.

To achieve these goals, the B3 Guidelines build on previous local and national efforts. The guidelines are designed to be clear and able to be used without consultants. They are designed to be compatible with LEED. Most importantly, the guidelines set up a process that will eventually lead to an accounting of the actual costs and benefits of sustainable building design. The State has further clarified the scope of the guidelines to focus on office and higher education classroom facilities, although the guidelines are suitable for most other building types.

B3 may not have LEED’s national cachet or the marketing power of a LEED seal mounted on a front door, but it is an efficacious sustainable building tool that is popular with the environmental industrial complex and worthy of your review.

Nationally consensus appears to be that a building code or the like that goes far beyond life safety is going too far and mandatory green building codes are not generally desirable. As damming as that is, the public appears willing to accept both government building and the beneficiaries of public money be required to comply with a voluntary green building rating system.

Attend Greenbuild: The Best Way To Grow Your Business

I was delivering a lunchtime speech to a group of real estate professionals yesterday and the first question I received was “how can I expand my green building business?” I retell that because it is a variation of the question I receive most often these days about green building.

My answer is simple. Attend the U.S. Green Building Council’s annual Greenbuild Conference and Expo.    

This year Greenbuild is in New Orleans from October 22 - 24. 

I am not a business marketing expert, but Greenbuild has been the number one source of new business for my green building law firm!

I have been attending Greenbuild on and off over 12 years. Last year, Greenbuild 2013 in Philadelphia was a far cry from the first USGBC “Green Building Conference” (yes, pre Greenbuild) held in conjunction with the National Institute of Standards in Gaithersburg, Maryland in 1994 which had 450 people in attendance. Last year dwarfed the first Greenbuild in 2002 when 4,189 people gathered in Austin. While I have not seen actual attendance numbers, I suspect more than 30,000 attended last year, making it the largest green building gathering each year and the best opportunity for networking among your peers.

Last year event company Hanley Wood acquired Greenbuild from USGBC (actually in advance of last year’s convention) and this will be their first expanded and bigger production. Hanley Wood is alos producing the international Greenbuild shows. 

It is all but impossible not to encounter new vendors and suppliers with more than 800 exhibitors on the Expo floor.  Educational activities abound, not only in the classrooms but some of the most cutting edge are in the Expo. For example, last year there was an asphalt pavement booth with scientific studies challenging what we think we know about urban heat island effect.

Greenbuild 2014 in New Orleans will be “the” target rich environment for green building people this year.

Today may be the last day for early bird registration discounts. So register today.

It is only 68 days until this once a year opportunity to expand your green building business.

And for those who will complain that this blog post is shameless promotion of USGBC, that might be true, but it is also correct that Greenbuild has been the number one source of new business for my green building law firm!

Having fun is also part of the Greenbuild experience. As a reader of this blog, if you email me, I will buy you a drink at a New Orleans watering hole or a coffee and beignet at Café Du Monde. 

Enterprise Green Communities Criteria Being Updated

In 2015 the use of LEED v4 will become mandatory, a new 2015 International Green Construction Code will be available, an updated ASHRAE 189.1 will be published, the new ICC 700 National Green Building Standard will be approved, and there will be a 2015 Enterprise Green Communities Criteria. 

In the arena of green building standards, green rating systems and green codes among the widely respected residential rating systems is the Enterprise Green Communities Criteria.

While the Criteria was developed by Enterprise to “provide a clear, cost-effective framework for all affordable housing development types in any location in the country, including new construction and rehabilitation in multifamily as well as single-family buildings,” the Criteria are used in more than just affordable housing.

The current Enterprise Green Communities Criteria, adopted in 2011, are grouped into the following eight categories: 1. Integrative Design, 2. Location + Neighborhood Fabric, 3. Site Improvements, 4. Water Conservation, 5. Energy Efficiency, 6. Materials Beneficial to the Environment, 7. Healthy Living Environment, and 8. Operations + Maintenance, which are not dissimilar from LEED for Homes.

All project types (single family, low rise multifamily, and mid/ high-rise multifamily) and construction types (New Construction, Moderate Rehab, and Substantial Rehab) use that set of Criteria.

There is only one level of Enterprise Green Communities Certification awarded. To achieve certification, projects must achieve compliance with the Criteria mandatory measures applicable to that construction type. Additionally, New Construction projects must achieve 35 optional points and Rehab projects must achieve 30 optional points.

Enterprise Green Communities has certified more than 30,000 homes to date (as compared to more than 132,000 registered with 50,000 certified under the LEED for Homes rating system). Also significantly, the Criteria have been adopted by more than 20 states as a mandatory requirement for allocation of Low Income Housing Tax Credits, a Federal program that finances roughly 90% of all affordable housing production in the U.S. So, the revision of the Criteria is of great import.

There are two primary opportunities where you can engage with the 2015 Criteria Development Process: First, Enterprise community partners local market offices are currently collecting feedback during the “Local Developer Comment Period” through third quarter 2014. And then, after the efforts of several working groups, Enterprise Green Communities will welcome comments on a draft version of the 2015 Criteria during their public comment period late in the fourth quarter of 2014.

For more information about the 2015 Green Communities revisions process email greencommunities@enterprisecommunity.org

2015 will be a year of great change in green building standards, rating systems and codes. Participating now in the development of the 2015 Enterprise Green Communities Criteria is an ideal way to prepare for what is to come. 

Litigation Over First Ever LEED Platinum Building Tarnishes Green Building

Last week, a federal appeals court brought back from the dead, a more than $6 Million lawsuit filed over materials supplied in 2000 for the first ever LEED certified Platinum building. Despite that the unpublished opinion is not binding precedent, it will have a chilling effect on green building and in particular on the selection of new or untried materials and products that are the keystone of many sustainable projects. 

The Chesapeake Bay Foundation v. Weyerhaeuser Company arose from the construction in 1999 of the Chesapeake Bay Foundation’s headquarters in Annapolis, Maryland. SmithGroup designed the building and Clark Construction oversaw its construction. SmithGroup’s “green” design called for exposed structural wood members outside the building envelope, including some that penetrated the facade. Under a March 3, 2000 purchase order that it entered into with Clark, Weyerhaeuser agreed to provide Parallam PSL columns and beams for use as the exposed wood members.

Parallams, which have a rough-hewn appearance, are manufactured by bonding together strips of wood. Its contract with Clark required Weyerhaeuser to treat the Parallams with the preservative PolyClear 2000, something then new and untried.

Water damage to the Parallams was observed during construction. Following final completion of construction in late December 2000, water began leaking through the Parallams into the building. In 2001 and 2002, the leakage was investigated by two outside consultants hired by Clark. A 2001 report by one of those consultants addressed to the Bay Foundation described that such water could cause deterioration or rot in the Parallams themselves if they were not properly treated with a wood preservative.

In a damning fact that may have had more to do with this court decision than the law, the Bay Foundation “… subsequently learned that the Parallams had not been treated with PolyClear 2000 as certified, that PolyClear 2000 was not in any event well suited to the job of preserving the Parallams, and that Weyerhaeuser had knowingly given false assurances to the contrary.”

The Bay Foundation initiated this case in state court on December 3, 2010 (i.e., 9 years, 11 months and some odd days after final completion) and the case was ultimately removed to the US District of Maryland. The complaint focused on the deterioration of the Parallams. According to the complaint, Weyerhaeuser breached its contract with Clark, owed common law indemnity and contribution to SmithGroup and Clark, and was liable to the Bay Foundation and SmithGroup for negligent misrepresentation and negligence.

The federal trial court, in awarding summary judgment to Weyerhaeuser, concluded that the plaintiffs’ state law claims were time-barred. Maryland’s statute of limitations provides that “[a] civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.” Maryland follows the discovery rule, which provides that “the cause of action accrues when the claimant in fact knew or reasonably should have known of the wrong.” And the trial court reasoned the 2001 report did just that.

But, the three judge panel of the Fourth Circuit Court of Appeals vacated the more than 2 year old order (that had dismissed the case) and remanded the case for further proceedings.  

The federal appellate court said, “viewing the evidence in the light most favorable to the plaintiffs, a genuine dispute exists as to whether knowledge of the water infiltration problem would have put a reasonable person on notice that the Parallams were susceptible to premature deterioration and that their PolyClear 2000 treatment would not preserve them.” 

This blog will continue to watch the saga that are these disputes and differences arising out of the first LEED Platinum certified building. And while only time will tell if this case will have a chilling effect on green building, it certainly will cause architects to give pause before specifying new or untried materials and products that are the keystone of many sustainable projects.    

Lawsuit Over LEED Documentation

A case filed last week in a California court is a prime example of the importance of contract documents in a LEED project.

Earlier this year the City of Palo Alto gave notice firing Flintco Pacific, Inc., the general contractor responsible for construction of the Mitchell Park library, a proposed LEED Platinum project. With a performance bond in place, the City and the surety announced in early March that they has negotiated a takeover agreement that will allow a new contractor to complete construction. 

But the current dispute playing out in letters between counsel for Palo Alto and Flintco is the claim by the City that when Flintco’s contract was terminated, it did not turn over the documentation necessary to pursue LEED certification. In a letter reprinted in part in the local print media, Assistant City Attorney Cara Silver said, "very little of the LEED documentation appear to be present." And in a follow up letter from the City's outside counsel, David Ginn to Flintco, also made public, Palo Alto further claims the missing documents relate to the “source and specific type of materials incorporated into the project, methodologies employed by the contractor to reduce waste and impact, and a significant number of other requirements.” Flintco responded that it had made all of the documents in its construction trailer available to the City and that these documents are responsive to all the deliverables identified in the construction contract.

And while Flintco argues that its contract was improperly terminated after the building was more than 97% complete that dispute may have to wait for another day.

It is disputes and differences over the documentation necessary to pursue LEED certification that apparently lead Flintco to commence a Petition for Writ of Mandamus against Palo Alto (.. yes, the general contractor sued the City) in Flintco Pacific, Inc. Vs City Of Palo Alto, filed July 17, 2014 in the Superior Court of California, County of Santa Clara, asking the court to declare that the City is violating the California Public Records Act and to command the City to produce all records relating to Flintco's information request for 49 categories of documents related to the construction including writings related to LEED certification.

While the merits of the construction dispute are beyond the scope of this blog post, this matter is significant because if highlights the importance of construction contracts expressly providing for who owns the LEED documentation. A common contract provision, but not found in the contract in this instance, provides,

Any LEED certification plan and materials prepared to support the LEED certification application are intended for use by the Owner with respect to this Project. [LEED Consultant] grants the Owner a nonexclusive license to utilize, including reproduce, the plan and those materials for purposes related to the building that is the Project. [LEED Consultant] shall be deemed the author and owner of the LEED certification plan and the materials prepared to support the LEED certification application, and shall retain all common law, statutory and other retained rights, including copyrights.

Do you know who owns the LEED documentation on the project you are working on?

Photo credit. Mitchell Park Library. Palo Alto Weekly photo.