Green Building Law Update
Could Solyndra Happen To Green Building Policy?
Of course it could -- it already has. But first lets recap the Solyndra saga.
Solyndra is the solar panel manufacturer in California that qualified for a $535 million federally-backed loan. Since receiving the loan, the price of solar panels has plummeted - good news - which has squeezed the margins of manufacturers like Solyndra. The result: two weeks ago, Solyndra announced bankruptcy. And taxpayers are now responsible for repaying a half billion dollars.
As I started thinking about the broader implications of the Solyndra collapse, I could not help but draw parallels to a similar federally-funded green project that has not panned out as expected: Destiny USA.
Destiny USA was a proposed $20 billion mega-mall that was supposed "to be not only the biggest man-made structure on the planet but also the most environmentally friendly." To support the project, the developer applied for a $2 billion Green Bonds program that Congress passed in 2004. In 2007, the Destiny USA project qualified for $238 million in tax-free financing through the Green Bonds program. In exchange, Destiny USA promised to redevelop a brownfield site, use massive amounts of renewable energy, and get LEED certification for 75 percent of the project.
However, from the outset, there were groups questioning whether Destiny USA could satisfy the Green Bond requirements:
[Ashok Gupta, senior energy economist at National Resources Defense Council] said he was impressed by the DestiNY team's enthusiasm for the strict guidelines, but wasn't sure the mall builders knew what they were in for. "I have a hard time believing that the DestiNY executives can deliver on their green promise," he said. "These are not developers who have ever attempted a green project, and it's not clear to me that they understand the extent of their commitment, financially and practically." Even developers who have worked on multiple green buildings would find a project of this scale to be extraordinarily challenging, he said.
It appears Gupta was right. In February 2011, Rick Moriarty reported that the Destiny USA project would not deliver on its renewable energy promises. Furthermore, it appears that the building itself will not be obtaining LEED certification. Instead, the USGBC and Destiny USA developers announced that all retail units inside the mega-mall would seek LEED certification:
“It’s never been done before,” said [USGBC CEO Rick] Fedrizzi as [Destiny USA developers] sat nearby. “When a major, major mall puts together a program creating leases requiring —requiring —tenants to be LEED-certified, it’s a major, monumental event.”
Coming back to our original question, the answer is yes, a Solyndra-type failure could happen to green building policy. It already has. And if the Green Bonds that funded the Destiny USA project were part of the American Recovery and Reinvestment Act, I can promise you it would be splashed on the front page of many newspapers.
What do you think?
Sustainability & Green Real Estate Attorneys
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Baltimore, Maryland 21286-5306 USA