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.

LEED "Pledge" to Replace LEED Bond

One of the very first green building legal conundrums may be resolved. 

The Washington Business Journal reported on October 31 that legislation will be introduced in Washington D.C. that will create an alternative to the much maligned LEED bond requirement in the D.C. Green Building Act of 2006. 

Under the Act, as currently written, as of January 1, 2012, all new construction greater than 50,000 square feet must obtain LEED certification.  Under the proposed legislation, developers will be permitted to make a binding "pledge" that LEED certification will be attained: 

Under the pledge route, if a new building fails to be certified LEED within two years of receiving its certificate of occupancy, the developer would be penalized $7.50 per square foot for buildings under 100,000 square feet, and $10 per square foot for buildings larger than 100,000 square feet.

Notably, the D.C. Council proposed to create an alternative enforcement mechanism instead of correcting the D.C. Green Building Act's many flaws.  Two prominent surety associations outlined these flaws in a white paper for the D.C. Government.  The associations suggested that LEED bonds would be made available if the legislation were to be corrected. 

For design professionals and contractors working in Washington D.C., the LEED Pledge will mean more onerous contract terms.  If developers can be penalized up to $3 million for not achieving LEED certification, these same developers will require guarantees of LEED certification from design professionals and contractors.  Don't be surprised to see penalty provisions in contracts that mirror the LEED pledge penalty. 

What do you think of the LEED Pledge?  

Photo credit: missrivs

Greener Cities: How Cities Across the U.S. are Incentivizing Sustainable Development

This guest post is by Joe Stampone of A Student of the Real Estate Game. Joe is in his final semester at the NYU Schack Institute of Real Estate with a concentration in sustainable development.


The behavioral shift towards sustainable development that we’re experiencing has changed the real estate landscape, however the marketing benefits, performance guarantees, and incentives that accompany green development don’t come without legal risks. If you want to learn about these risks and issues there’s no better forum than GBLU. Chris has been the ‘go-to’ source for all green building legal issues. When I learned that he was accepting guest post submissions I couldn’t pass up the opportunity to be a part of such a great community. 


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Over the last decade there has been a heightened awareness of the environmental impact of new construction and the existing building stock that make up the built environment. 


To minimize the environmental impacts of the built environment, cities have begun to develop a wide spectrum of green building policies which can shape the market from requirements such as Chapter 13C of San Francisco’s Building Code, which enforces large commercial and residential buildings to meet LEED Silver Certification to incentivizing exceptional performance and design. 


This post presents a brief summary of the ongoing research on the various ways cities are incentivizing sustainable development. Based on my research, I found that there are 6 major incentives which are offered in different forms throughout various cities:


Expedited Permitting


The objective of expedited permitting is to create an incentive for developers to incorporate green building practices and achieve specific local sustainability objectives by giving greater assistance and facilitation through the permitting process. This can shave significant time off the permitting process and lead to considerable cost savings. Of the cities I analyzed Chicago, Seattle, and San Francisco utilized an expedited permitting program while Salt Lake City has an expedited plan review. Each city used the LEED rating system as a benchmark. 


However, it’s important to note that emerging alternatives and a growing demand for performance-based metrics may shift policy structures in the future. 


Free Publicity


Offering free publicity to green projects is a cheap way for cities to promote sustainable development. However, to be effective, it requires an aggressive and resourceful marketing effort to get projects noticed in a market cluttered with green projects. 


Washington D.C. is the best example of giving free marketing to private green projects. They have an interactive map and website that highlights environmental points of interest throughout the city including LEED buildings, green roofs, energy star buildings, geothermal sites, wind energy sites, solar energy sites, etc. (www.green.dc.gov/map). 


Washington D.C. is also in the process of creating an interactive “dashboard” providing metrics for measuring the effectiveness of green building and initiatives that looks at how each project is contributing to the goals of their Climate Action Plan.


Financial Incentives


Many cities are experimenting with or considering ways to financially incentivize green building, however as most cities are resource-constrained this is not a viable option. Portland Oregon’s recently completed Green Investment Fund is the best example of a financial incentive. They awarded grants to projects that exhibited a wide range of innovative green building practices from energy efficiency and on-site renewable energy generation to water harvesting and recapture. In addition to the Green Investment Fund, Portland has considered the implementation of a Feebate program; however it has experienced push-back from the development community.


Density Bonus


The objective of a density bonus is to create an incentive for developers to incorporate green building practices and achieve specified local sustainability objectives by permitting additional floor space above the allowable zoning for qualified projects.


Currently, Pittsburgh, Seattle, and Arlington, Virginia offer additional FAR for projects which meet a specific level of LEED Certification. In Pittsburgh, an additional 20% of floor area is awarded for projects that meet LEED Silver Certification while in Arlington various bonuses are associated with each level of LEED Certification. 


Green Building Code Mandates


The objective of the Green Building Mandate is to use a required Green Building Standard as an adjunct to the Building Code to raise the requirements for all aspects of a building’s design that could affect energy performance. 


The best examples of this are Washington D.C.’s Green Building Act of 2006 which requires public buildings to meet LEED Certification and San Francisco’s Chapter 13C of the Building Code which requires large commercial and residential buildings to meet LEED Silver Certification. Austin, Denver, Santa Fe, and Portland among others have green building mandates for public buildings.


Green Building Codes


The objective of a Green Building Code is to redefine the building codes to require all new construction and major renovations to meet green building requirements, including specific requirements for all aspects of a building’s design that could affect energy performance. The best example is California’s recently introduced CALGreen Code. 


CALGreen is the first statewide green building standards code in the nation. It went into effect on January 1st, 2011 and has a number of mandatory and voluntary environmental measures such as planning and design requirements, energy efficiency, water efficiency and conservation, material conservation and resource efficiency, and environmental quality. 


Also, the International Code Council recently released public code version 2.0 of the International Green Construction Code (IGCC) which allows jurisdictions to use their administrative powers to exercise the flexibility inherent in the code. I know Chris and the GBLU team will talk more about the IGCC going forward.


Incentives, mandates, and codes offer cities a great opportunity to encourage green building; however I think it’s necessary to determine the optimal mix of incentives and regulations that balance efficiency goals with constrained municipal budgets. 


Finally, a detailed cost benefit analysis must be conducted to see which incentives and regulations will fit the framework of your city.

Series Introduction: Discussing the IGCC


If the International Green Construction Code (IGCC) is successful, green buildings will soon become the rule instead of the exception.  By codifying green building standards, the IGCC has the potential to make major strides to advance green building practices on a scale that has been unattainable through LEED and other similar voluntary green building standards.


We are currently in the period for public commentary on the proposed International Green Construction Code (IGCC), we at Green Building Law Update have decided to do a series highlighting some of the proposed IGCC provisions.  Most of you do not have time to read the entire 243 page proposed code but that is what interns are for.  

 
Overall, the IGCC seeks to expand on the current voluntary green building certifications (LEED, etc.) by providing a green construction code standard that can be implemented in various jurisdictions while allowing for adjustments for specific local concerns.

 

If your city decides to adopt the IGCC, Green Building Law Update wants you to be prepared and know what it means for you and your business.  Each Wednesday we will post a proposed code section and a short analysis.  Please feel free to discuss the pros and cons of the proposed code in the comments.  Please also note that if you are especially passionate about a certain provision of the IGCC that the public commentary period runs until August 12, 2011.  The IGCC is expected to be finalized by January 2012.

Photo Credit: International Code Council

Free Webinar: The Reality of Implementing Green Building Codes

I have been amazed at the immediate interest generated by the International Green Construction Code (IGCC).  

Despite the fact that the IGCC is still in its infancy, there are a number of states and municipalities closely studying it for adoption.  We have already discussed Rhode Island’s adoption of IGCC for public buildings.  More significantly, legislation was introduced in Maryland just a few days ago to allow statewide adoption of the IGCC.  

Based on the interest in IGCC, I have teamed up with BasicGov and Bob Kobet to present a free webinar related to green building code adoption:

“The Reality of Implementing Green Building Programs in Your City”

The webinar is FREE and will take place on February 23 at 2 pm eastern.  During the webinar we will cover the following topics:

  • The basics of IGCC
  • Best practices for implementation of green building codes
  • Problems that have arisen in jurisdictions that have adopted green building codes

I hope you can join us.  And please pass on the webinar information to your favorite city official or planner.  

Disclaimer:  I am being paid to speak at this webinar. 

 

IGCC a "Step in the Right Direction"

I continue to ponder the importance of the release of the International Green Construction Code public version 2.0 (IGCC).  I recently asked Bob Kobet, LEED Faculty member, to provide his thoughts on IGCC.  It's good to see that I am not the only one who thinks the new code is a big step for green building.  

For the last 31 years my professional life as an architect and educator has been linked to codes. Through it all my core beliefs about codes, why we have them and how they get developed and enforced have been reinforced. They include:

1) Architecture is complex, no matter now simple the project may seem. It is very difficult to write codes that apply with equal rationale to a variety of building types in different geographic locals and climate zones.

2) Codes do not lead the technology parade. They follow it.

3) Code officials are generally not known for taking risks or being overly creative in their role as authorities who essentially interpret and enforce the law. Most “go by the book” for a reason, so what is in the book is critically important to the advancement of building performance and environmental stewardship.

From this perspective the International Green Construction Code (IGCC) provides a much needed alternative for advancing environmentally responsible architecture combined with the ability for municipalities to adopt what they believe is most appropriate and important to them.

The IGCC was developed to be consistent and coordinated with the ICC family of Codes & Standards. These are the I-Codes, which include ASHARE 189.1. ASHRAE Standard 189.1, Standard for High-Performance Green Buildings Except Low-Rise Residential Buildings, is an American National Standards Institute (ANSI) standard developed by the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) in association with the Illuminating Engineering Society (IES) and the U.S. Green Building Council (USGBC). The IGCC allows jurisdictions to choose ASHRAE Standard 189.1 as an alternative compliance path. The IGCC is applicable to commercial buildings, including existing buildings undergoing alterations and additions. Traditional and innovative construction practices are addressed.

The IGCC does not replace existing codes or force municipalities to make wholesale administrative changes. Instead it allows jurisdictions to use their administrative powers to exercise the flexibility inherent in the IGCC. This is possible because the IGCC contains a new regulatory framework that allows choice and adaptation to local or regional conditions. Through the use of Baseline requirements, Projective Electives and Jurisdictional Requirements, the IGCC has achieved a balance between traditional safety issues and sustainability. The balance is a result of collaboration between the International Code Council, ASHRAE, ASTM, The AIA, and the US Green Building Council.

Overall I favor the approach the IGC and its partners have taken with the IGCC. I am hopeful it will meet the expectations of those who have worked so hard to make it available. Finally, there is a code emerging that supports renewable energy systems, rainwater harvesting, grey water reclamation, nontoxic design and straw bale construction. There will be those who view the IGCC as just another code to confront. I embrace it is a significant step in the right direction.

IGCC Provides Alternative Green Building Code Option

Back in October 2010, Doug Reiser and I co-presented on the topic of substituting LEED for traditional building codes.  As we were finishing our presentation, I reiterated our primary theme that LEED standards should not be used as a building code.  One of the audience members raised her hand and asked why weren’t we discussing the International Green Construction Code (IGCC).  

That audience member was right--states are beginning to consider the adoption of IGCC as a state-wide green buiding code in lieu of LEED certification requirements.  

The IGCC is available for a free download.  I suggest you take a look at it.  At the front of the code is a “Roadmap to the International Green Constructon Code” that I found to be helpful:

“Chapter 3 is the core of the (IGCC).  It is formatted to: facilitate the customization of this code to address local issues; provide options for construction which exceed the minimum requirements of this code; and provide for the implementation of best practice. . . .

All of the provisions of this code, other than those selected by the jurisdiction in Table 302.1 and those designated as project electives, are mandatory as applicable.”  

Rhode Island was one of the first states to adopt the IGCC.  Interestingly, Rhode Island adopted the code as an “‘equivalent standard’ to meet requirements that all new major facility projects by state agencies be constructed as green buildings.”  

Do you see other states adopting IGCC as an “equivalent standard” to other green building rating systems? 

Are Challenges to Green Building Codes on the Rise?

Last night I had dinner with a long-time reader of Green Building Law Update.  I was frank with him, and I will be frank with you.  I will be doing two things this year with the blog: 

1.  I am going to stop talking about LEEDigation as much.
2.  I am going to talk more about the green building codes, and the challenges to those codes that are occurring throughout the country.

A trend seems to be developing across the country in the green building world.  Traditional builders and manufacturers are fighting against green building codes and programs.  You can expect an increase in these types of challenges in 2011. 

One of the first reported legal challenges to a green building code occurred in New Mexico with the case Air Conditioning, Heating, and Refrigeration Institute (ACHRI) v. City of Albuquerque.  The case focused on the Albuquerque Energy Conservation Code passed by the city on September 17, 2007.  The goal of the code essentially was to create greater energy efficiency in buildings and products.  As often happens with new regulations, numerous parties were unhappy with the Code.  Three trade associations representing HVAC product manufacturers, distributors and installers challenged the Code, and the case was ultimately decided on September 30, 2010 by Judge Martha Vazquez of the U.S. District Court for the District of New Mexico. 

While the legal challenge focused on many portions of the Code, I am focusing on Volume I, which included requirements for commercial buildings and multi-family buildings. 

In order to comply with Volume I of the code, a building had to satisfy one of three paths:

  1. The building must achieve LEED certification;
  2. The proposed building must be 30 percent more energy efficient than a baseline building; or
  3. The Heating, Ventilation, and Air Conditioning (HVAC) system and equipment must comply with minimum energy efficiency standards.

There is a key difference between the first two compliance paths and the last.  The first two paths can be described as performance-based because the building must perform in a particular manner.  The last path is a prescriptive compliance path, which means it focuses on the products that go into a building. 

Judge Vazquez relied on the legal theory of federal preemption to strike down the code's prescriptive compliance path:

"The Court concludes that the prescriptive provisions of Volume I requiring the use of heating, ventilation, or air conditioning products or water heaters with energy efficiency standards more stringent than federal standards are regulations that concern the energy efficiency of covered products and, therefore, are preempted as a matter of law."

Judge Vazquez pointed to the National Appliance Energy Conservation Act, which expressly preempted product energy efficiency standards: 

"A standard prescribed or established under section 6313(a) of this title shall, beginning on the effective date of such standard, supersede any State or local regulation concerning the energy efficiency or energy use of a product for which a standard is prescribed or established pursuant to such section."

Judge Vazquez went on to uphold performance path one and two because the plaintiffs presented a "cursory argument" and "very few material facts" in support. 

The question remains whether a court could find federal preemption of a LEED-based code if properly argued by a plaintiff. 

Is the Only Solution Public-Private Partnerships?

Many months ago, I promised a two-part series on public-private partnerships.  Part one was previously published and today I wrap up the series with post two.  As we head in to 2011, public-private partnerships will play a vital role in replacing the non-existent state funds for necessary public works projects.  Here is part two on public-private partnerships: 

We have already revealed Secret No. 1 about public-private partnerships: there is bi-partisan support for PPPs.  I promised to reveal Secret No. 2 about PPPs.  In hindsight, I should have probably not labeled this a secret as it is more an observation verging on opinion.  Some of you that do not support public-private partnerships will not agree with this observation. 

Secret No. 2:  There appears to be no viable alternative to public-private partnerships. 


If you work in the construction industry, you probably know that the U.S. infrastructure is in dire need of renovation and repair.  According the American Society of Civil Engineers (ASCE), the U.S. infrastructure is in absolute disrepair based on its 2009 U.S. infrastructure grade card:

2009 Grades
Aviation D
Bridges C
Dams D
Drinking Water D-
Energy D+
Hazardous Waste D
Inland Waterways D-
Levees D-
Public Parks and Recreation C-
Rail C-
Roads D-
Schools D
Solid Waste C+
Transit D
Wastewater D-

America's Infrastructure GPA: D

Further, the ASCE has concluded that an investment of $2.2 trillion would be required over the next five years to improve our infrastructure.  Assuming the ASCE is correct, repairs to our infrastructure will require substantial investments by the states charged with infrastructure upkeep. 

But states have no money. 

Check out the grim outlook for state budget shortfalls from the Center on Budget and Policy Priorities:

The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. State tax revenues were 8.4 percent lower in the 2009 fiscal year than in 2008, and an additional 3.1 percent lower in 2010, while the need for state-funded services did not decline. As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps. At least 46 states struggled to close shortfalls when adopting budgets for the current fiscal year (FY 2011, which began July 1 in most states). These came on top of the large shortfalls that 48 states faced in fiscal years 2009 and 2010. States will continue to struggle to find the revenue needed to support critical public services for a number of years, threatening hundreds of thousands of jobs.

From my vantage point, I see an extreme need for infrastructure upgrades and I see public bodies that do not have the financial ability to fund the upgrades. 

If the public sector cannot fund infrastructure improvement, isn't the only other solution private sector investment through public-private partnerships? 

Photo credit:  Barbour

Public-Private Partnerships Are a Bi-Paristan Issue?

I just finished up a presentation to the Construction User's Roundtable (i.e. users of construction services) regarding public private partnerships (P3s). P3s are defined by the National Council of Public Private Partnerships as:

"a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility."

In the course of preparing for my speech, I learned two very important secrets about public private partnerships that I want to share with you.

Secret No. 1. P3s have bipartisan support.

One of the first areas I researched for my presentation was the effect the recently-completed election would have on P3s. You may have noticed that the House of Representatives will now be controlled by Republicans, many of which ran on a platform of fiscal austerity. As a result, the new Congress is likely to be less supportive of expensive public works projects. At the same time, our infrastructure - including old buildings - needs significant upgrades. For example, take a look at the abysmal grades given to the U.S. infrastructure in 2009 by the American Society of Civil Engineers (ASCE).

My research uncovered secret number one: support for public private partnerships is bi-partisan. Many politicians on both sides of the aisle have indicated their support for P3s as a means to fix our infrastructure problem. Here are some quotes I used during my presentation:

“That means maintaining strong support for public-private partnerships like NREL. . . . ”

- Rep. John Boehner, presumptive House Majority Leader

“Innovative public-private partnerships are appearing around the country, bringing much-needed capital to the table. It is important to ensure that the public interest is well-served in public-private partnerships, since they are here to stay and likely grow in importance.”

- Rep. Nancy Pelosi, Speaker of the House

And probably most important, Rep. John Mica, the presumptive Chairman of the House Transportation & Infrastructure Committee recently indicated he supports P3s, at least in one instance. In response to questions about the future of an American Recovery and Reinvestment Act high-speed rail project in Florida, Rep. Mica suggested that a public-private partnership should be used to get the project done:

"I want private dollars involved in this," Mica said. "If someone in the private sector puts up $500 million and that's $100 million short – I'm in an excellent position to assist. But I don't want the private sector to see this as a gravy train.”

Along with the Congress, President Barack Obama is strongly supportive of P3s and is pushing a National Infrastructure Bank to support P3 development.

While bi-partisan issues are few and far between these days, public private partnerships appear to have support of both Republicans and Democrats. With growing infrastructure needs and bi-partisan support, P3s may gain in popularity over the next few years.

I will reveal secret number two on Monday.

Photo credit:  Photo Phiend

Do Davis-Bacon Wage Issues Affect Your Stimulus Project?

Across the country, government officials are scrambling to award and spend American Recovery and Reinvestment Act (ARRA) funding before upcoming deadlines.  If you are a contractor or subcontractor lucky enough to work on one of these projects, congratulations! 

Now comes the tough part. 

Working on a federal or state-funded project brings a myriad of regulatory issues that must be resolved.  One of those issues is Davis-Bacon compliance.  As you sort out compliance issues, here are some questions to think about: 

  • Is the project a federal project subject to federal labor laws? 
  • Is the project a state project subject to state labor laws?
  • Is the project both a federal and state project subject to both federal and state labor laws?

Is your head spinning yet?  In some circumstances, depending on the government agencies involved and the source of funding, you may actually be subject to both federal and state labor laws.  I have assisted clients with these confusing issues, so please contact me if you have questions (chris@cheathamconsulting.com). 

Photo Credit:  NIOSH

Warning: This Post May Give You Green Building Legal Nightmares

For this Halloween edition of Green Building Law Update, I thought I would try to scare your socks off by describing circumstances that may lead to the green building legal apocalypse.  Be warned, this blog post is going to give you nightmares! 

Last week, Doug Reiser and I presented at the Green Legal Matters conference on the following topic:

"The Green Building Legal Apocalypse: Why Cities Should Stop Mandating LEED" 

I have received a number of inquiries about the presentation so I published the slideshow.  I am big on not using a lot of words or bullet points on slides so I am not sure how helpful the slideshow will be, but I am happy to answer any questions you may have about it in the comments section. 

There is one central theme of our presentation:  municipal governments should stop mandating LEED certification for private construction.  I could run through all of the reasons - there is no proper enforcement mechanism, there will be increased LEEDigation - but in my mind, the creator of the LEED rating system, the US Green Building Council, makes the most powerful argument for not mandating private-construction LEED certification: 



This picture is taken from the USGBC white paper, "Greening the Codes" (pdf).  The hyphenated vertical line represents the current market.  The updwards sloping, blue area at the bottom represents building codes.  The dashed line above the blue area represents green building codes.  Above the green building codes are LEED Platinum, Gold, Silver and Certified certification levels. 

What does it mean? 

If you need evidence that LEED certification was never meant to be a building code, and should not be a building code, use this picture.  Building codes are the minimum.  By mandating LEED certification for all private construction, a government essentially makes LEED certification a building code, a minimum.  LEED certification is supposed to represent buildings that have gone beyond the building code.  With this picture, the US Green Building Council is telling us not to use LEED certification for private-construction mandates. 

LEED certification is a high bar, and if certification is mandated, not everyone will comply.  Non-compliance means penalties, disputes and litigation.  This is why I say governments that are requiring LEED certification for  private construction are setting the stage for the green building legal apocalypse. 

LEED Building Vacated Due to Structural Issues

Construction defects often take a long time to develop.  Take, for example, the Courthouse Square building in Salem, Oregon, which is used for county offices and retail stores.  It was constructed in 2000 and received its LEED certification in 2002. 

As early as 2002, problems were identified at the project, including cracked grouting and loose tiles.  But it was not until July 2010 that the Courthouse Square buiding had to be vacated due to structural problems

"Henderson said the county started monitoring the floor in 2008 after an evaluation by David Evans and Associatesfound floor deflection, stating that 'portions of the original structural floor slab design were inadequate with regard to code requirements'. . . .

The county’s original plan was to stay in the building as the firm did tests on the building’s integrity, but that plan changed when the floors got worse.

'It’s only been in the last short time that the seriousness of these issues have come to light,' said Henderson. 'We had an incident on Friday where we believe one of the post tension cables ruptured.'

The cables are located in the building’s concrete floor slabs to provide rigidity. Several cables are in the slabs for redundancy and backup support, so the county at first did not believe one ruptured cable posed an immediate threat.

But after the rupture, further inspection found that 33 to 35 of the building’s 220 columns where bearing a weight that is more than code allows. The county then decided to vacate the building."

Since the evacuation was the result of construction defects, my initial thought was that LEEDigation was unlikely.  But a blog post at Green Building Elements further piqued my interest regarding potential LEEDigation:

"No one knows, or is saying at least, what is causing all the structural issues.  Cracked walls and ceilings are the hallmark of what appears to be a buckling post-tensioned concrete slab.  The concrete was recently tested and found to not meet the specified strength.  Garbage was found in the slab when samples were taken." 

Would any of the following scenarios be grounds for LEED decertification if the original certification was challenged?

  • Installing concrete slabs that include garbage?
  • Failing to meet code requirements?
  • Having a LEED-certified building deemed structurally unsound? 

What do you think? 

Photo Credit: Oregon.gov

Are You Prepared to Report Your Greenhouse Gas Emissions?

It's an understatement to say environmentalists were disheartened by Senator Reid's announcement last week that a comprehensive cap-and-trade bill would be tabled for the year.  But, fear not, environmentalists - and, be fearful, unprepared federal contractors - because the federal government will be regulating greenhouse gas emissions in other ways.  

Back in October 2009, we talked about the groundbreaking Executive Order 13514, which set advanced sustainability requirements for the federal government.  One of the most important parts of the Order is Section 13, which asks the General Services Administration to look into the feasibility of requiring  vendors and contractors to report greenhouse gas emissions. 

The GSA recently released its report, which concludes that it is feasible to implement a "phased approach, for the Federal Government to track and reduce its scope 3 supply chain emissions through coordination with suppliers and other stakeholders."  In short, a greenhouse gas emissions reporting requirement will be phased in, and eventually mandated for federal contracts.

For federal contractors - and eventually state and local contractors - tracking, reporting, and reducing emissions will become an important strategy for winning government contracts. 

While much of the focus of Green Building Law Update has been on green building certification, I plan to shift gears in the coming months and focus more on greenhouse gas emissions reporting requirements for federal contractors.  Why?  

My concern is that construction contractors are not prepared to report greenhouse gas emissions.  

Are you prepared to report your greenhouse gas emissions?    

Photo credit: melancholic optimist

Public-Private Partnerships Support Green Building

States are facing significant budget gaps.  These budget gaps are going to negatively affect the green building industry.  States looking to shore up budgets will cut new construction and maintenance of existing buildings in the coming years.  

But there is a solution: public-private partnerships. 
 
Just prior to the economic downturn, the phrase "public-private partnerships" - or P3s - was on the tip of everyone's tongue.  Then the Great Recession hit, and billions of dollars were injected into the economy via the American Recovery and Reinvestment Act (ARRA).  Suddenly, states were flush with cash to pay for infrastructure projects and seemed to forget about P3s.  However, the ARRA funding is running out and states will be looking for innovative ways to finance new construction and major rehabilitations of existing buildings.  

P3s are the answer.  What is a P3?  According to the National Association of Public-Private Partnerships:
"A Public-Private Partnership (PPP) is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility."
The classic example is a toll booth that is either constructed, maintained or operated by a private entity in exchange for some of the toll revenues.  

National Nuclear Security AdministrationBut P3 practices are also being used for green building projects.  For example, the General Services Administration recently entered into a P3 lease agreement for a new campus to house the National Nuclear Security Administration's Kansas City manufacturing operations, which are seeking LEED Gold certification:

"The Heartland Region of the General Services Administration on Monday signed the final lease agreement with CenterPoint Zimmer LLC for a new campus to house the National Nuclear Security Administration’s Kansas City manufacturing operations. . . .

CenterPoint Zimmer, a subsidiary of CenterPoint Property Trust of Oak Brook, Ill., will receive annual rent of $61.5 million through the 20-year lease for a total contract amount of $1.23 billion.  Stephen Stanberry, the GSA contracting officer who worked on the lease, said it is a “net of utilities” leasing, meaning the NNSA will pay its own utility costs.

In return for the NNSA lease payments, CenterPoint Zimmer will develop the new campus. . . ."

My friends at J.E. Dunn will be constructing the project.

If you have questions about P3s, please let me know and I will do my best to address them in future posts.

"Greening the Codes" Is a Good Start

The United States Green Building Council (USGBC) recently published a white paper entitled "Greening the Codes" that is simultaneously very helpful and somewhat frustrating.  The most important information is buried on page seven after an unnecessary review of the history of building codes.  But if you can get through the first six pages, you will find that the USGBC has made an important statement, although one that could have been made more boldly:  

"Raising the Floor: While green building rating systems such as LEED have been designed to benchmark above-code leadership for buildings that intend to go beyond the minimum, it is equally important to complement this leadership with stronger, more comprehensive building codes. Safer, healthier, and more environmentally responsible codes are at the heart of sustainability planning for raising the floor for the entire community. These codes are a viable new baseline off which incentives for exemplary leadership and commitments for public buildings to pave the way can naturally be built.

For commercial buildings: Consider adopting the International Green Construction Code and its technically rigorous 189.1 compliance path.

For residential buildings: In addition to adopting and implementing the 2009 International Energy Conservation Code, consider a well-established local green homebuilding program in your area. In the absence of such a program, the ICC-700 compliance path of the International Green Construction Code should be considered as a means for jurisdictional oversight for residential buildings."

I wish the white paper had stated in big bold letters on page one "STOP USING THE LEED RATING SYSTEM FOR BUILDING CODES."  But the statement in the white paper is a good start. 

Based on this white paper, I would suggest that it is time to revisit the D.C. Green Building Act before it's too late.  As you may recall, starting in 2012, all private construction greater than 50,000 square feet will be required to achieve LEED certification in Washington, D.C.  The USGBC's white paper all but states that the LEED rating system should not be used as a de facto building code for commercial buildings.  

And there still remains the issue of the unavailable "bonds" required to enforce the Act, but I won't get started on that.  At least for now.  

What are your thoughts on "Greening the Codes"? 

Buiding Not LEED Anymore, Eh?

On Saturday, I was having a leisurely breakfast with my wife when I foolishly flipped on my blackberry, opened my email and stared at the following headline:

Comox Rec Centre not LEED anymore

Breakfast was essentially over.  Never before had I seen the potential for LEEDigation stated so clearly in a headline.  

The Comox Recreation Centre is located in Comox, Canada.  According to the story at Canada.com, the project was originally pitched to receive LEED Platinum certification: 

"The expansion of the main entrance area and the older multi-purpose was expected to be built to the highest level of LEED certification, or LEED Platinum when it was awarded $950,000 in federal grants last fall.

But Comox Mayor Paul Ives says that certification was never realistic given the project's smaller budget and that the retrofit had to be built on the existing footprint.

'If we'd gone through LEED, we were going to be hard pressed to get LEED Silver, probably not Gold and definitely not Platinum because of the rating scale,' said Ives."
Like many cities and towns in America, the Canadian town proclaimed its desire to build green through a resolution:
"Town council held in camera meetings March 23 and resolved to build 'an environmentally responsible and as energy efficient building as the budget allows', a downgrade of an earlier resolution that called for LEED platinum 'or a similar standard with financial limits.'"
So we have a federally-funded project in a Canadian city that received funding because it unrealistically promised LEED Platinum certification?  
 
Could you imagine the consequences if this project was in the United States?  The Department of Energy is distributing over $6 billion in American Recovery and Reinvestment Act funds for "green" projects.  What would happen if a city receives funds for a green building project and then drops promised LEED certification?  Such a result could lead to a GAO audits and negative press.  

And what are the consequences if a Government in this scenario proceeds with the project and continues to demand LEED certification from a contractor or architect? 
 
I think I am losing my appetite again.

Related Links: 

Comox Rec Centre Not LEED Anymore (Canada.com)

Los Angeles Times Assails Weatherization Program (GBLU)

Photo credit:  Antony Pranata

What are the Broader Implications of DC's Green Performance Bond?

I recently had the pleasure of sitting down with Chris Birk of Surety Bonds Insider to discuss surety issues and the green building industry, particularly related to the D.C. Green Building Act.  

As a quick reset, the D.C. Green Building Act of 2006 requires owners put up "performance bonds" that guarantee LEED certification for certain projects.  The surety industry has raised concerns that these types of bonds do not exist.  My favorite question was when Chris asked me about the implications of the D.C. Green Building Act "performance bond" issue for the broader green building industry:

Chris Birk:  "What sort of long term, beyond the District implications are there in this?"

Chris Cheatham:  "This same issue will pop up wherever there is a green building regulation being proposed or pushed forward.  Whenever you are mandating some type of certification, some type of green building certification, you have to have an enforcement mechanism.  Because if you don't then people won't comply and its pointless to have the regulation.  You have to have some type of penalty." 
I appreciate the opportunity to work with Surety Bond Insiders on this interview.  Please take a listen and let me know what you think.  What other issues should Chris and I discuss surrounding
the surety, construction and green building industry. 

Related Links: 

Surety Bonds Sit-Down: The Future of Green Building with Chris Cheatham (Surety Bonds Insider)

A Green Building Performance Bond (GBLU)

Does Your Construction Project Require Davis-Bacon Wages?

[I have said many times that the legal principles that will apply to green building projects will be very similar to existing legal principles in the construction law field. Going forward, on Fridays we will be reviewing legal developments from the construction industry that most likely will be applied to green building projects.]
 
If you are working on a construction project funded by the American Recovery and Reinvestment Act (or you have any hint that you are), you need to be aware of your responsibility to pay Davis-Bacon wages.
 
Section 1606 of the American Recovery and Reinvestment Act (ARRA) sets out the Davis-Bacon wage requirements:
"Notwithstanding any other provision of law and in a manner consistent with other provisions in this Act, all laborers and mechanics employed by contractors and sub contractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to this Act shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code."
The Department of Labor (DOL) has broadly interpreted Section 1606 (pdf) of American Recovery and Reinvestment Act (ARRA):
"Section 1606 of ARRA plainly indicates that the Davis-Bacon prevailing wage requirement broadly applies to ARRA-appropriated construction projects. . . . [The ARRA] also extends the prevailing wage requirements to projects 'assisted in whole or in part by and through the Federal Government pursuant to this Act' thus encompassing any assistance provided for ARRA projects through grants, loans, guarantees, and insurance."
In short, if any ARRA dollars are funding your construction project, Davis-Bacon wages are required (barring very limited exceptions). If you are working on a construction project in 2010, particularly one funded by a governmental entity, it is important that you ask if the project is being funded in any amount by ARRA funds.  If ARRA funds find their way into your project and you have not accounted for Davis-Bacon wage requirements, a change order may be necessary. 
 
Related Links
 

Where the Heck are the Green Jobs?

I often get the same question about the American Recovery and Reinvestment Act: where are the green jobs and projects?  A recent Wall Street Journal article sheds light on that question:

"The Obama administration's economic-stimulus program has delivered about a third of its total $787 billion budget during its first year, much of that to maintain social services and government jobs and to provide tax cuts for workers. Now, the pace and direction of stimulus spending are about to change.

Infrastructure spending is set to step up in the second year of the stimulus program, which should mean more money flowing to private-sector employers."

Infrastructure spending includes the green building projects that will be administered by the General Services Administration, the Department of Defense and the Department of Energy.  A large portion of the $180 billion set aside for infrastructure projects has not been spent: 

"During year one of the stimulus, only about $20 billion of money was handed out for infrastructure projects.

'I think we'll see a lot more stimulus money get into actual contracts and actual hiring in 2010 than we did in 2009,' said Kenneth Simonson, chief economist of the Associated General Contractors of America."  

If you are looking for ARRA green building projects, 2010 appears to be the year.  

Photo:  vividbreeze

Related Links:

Bulk of Stimulus Spending Still to Come (WSJ)

Tysons Corner Bonus Density Program Criticized

I used to work in Tysons Corner, Virginia. It is a fascinating place for many reasons, not the least of which is the fact that the area supports 105,000 jobs but only 17,000 residents. One of the consequences of this job-to-resident ratio is a daily traffic jam as workers leave for the day.

Government officials want to remake Tysons Corner into a more sustainable community by increasing density and residential options. As you can probably imagine, there are many competing proposals put forward by varying interest groups. One of the proposals involves permitting density bonuses to developers if a building seeks LEED certification:

"As far as density bonuses, a 10 percent bonus is proposed in return for LEED platinum certification, and bonuses are to be compoundable. For example, if a developer obtained a 20 percent density bonus for offering 20 percent affordable housing, the additional bonus for LEED certification would be for 10 percent of the resulting density cap, for a total bonus of 32 percent."

The proposed density bonus program is similar to the Arlington bonus density program. Not everyone supports the Tysons Corner bonus density program though:

  • “Representing the Town of Vienna, Town Council member Laurie Cole said the ‘implementation entity’ that is to oversee the fulfillment of the plan should include residents of the surrounding communities. ‘The future of Tysons Corner affects us directly and deeply,’ she told the commission. Cole advised against density bonuses for LEED (Leadership in Energy and Environmental Design) certification, as well as the compounding of density bonuses, saying that such policy was ‘testing the surface tension of what Tysons Corner can contain.’”
  • “[Jonathan Cox of AvalonBay Communities] also said recommendations for LEED certification would be punitive to residential redevelopment, as LEED standards were developed for office and commercial buildings and not for residential developments.”

What do you think of these criticisms of the proposed Tysons Corner bonus density program?

 
Related Links
 

Arlington County Revises Green Building Density Program (GBLU)

Photo:  Shanghai Steve

D.C. Keeps PACE To Support Energy Efficient Homes

Do you remember Property Assessed Clean Energy (PACE) bonds? If you recall, in a June 2009 post, I proclaimed my undying affection for PACE bonds, which can serve as a financing mechanism to retrofit homes and buildings:

“PACE is a bond where the proceeds are lent to commercial and residential property owners to finance energy retrofits (efficiency measures and small renewable energy systems). OWNERS then repay their loans over 20 years via an annual assessment on their property tax bill. PACE bonds can be issued by municipal financing districts or finance companies and the proceeds can be used to retrofit both commercial and residential properties.”

My hope was that jurisdictions across the country would use PACE bonds to finance retrofits of homes and buildings. Turns out, PACE bonds have been proposed in my own backyard.

In December 2009, District of Columbia Mayor Adrian Fenty announced his "administration is preparing an application for a federal grant to create a $35 million revolving fund that would make loans to District homeowners and commercial property owners for energy efficiency improvements."

There are two basic steps to establish a PACE bond program. First, a state must pass enabling legislation. Second, the state must secure seed money for the revolving fund that will finance the PACE bonds. The D.C. government is proceeding forward with both steps:

"[T]he Council of the District of Columbia is expected to take up legislation that would create not only an administrative mechanism for running the program, but would create a 'property assessed clean energy' (PACE) bond program, that will ensure sustainable funding for this initiative in coming years. The legislation would allow the District to issue a series of conduit bonds up to $250 million. The federal funds would initially seed the fund and future bond sales would be backed by future tax collections.

The average age of a building in the District is about 72 years old, or about 30 years older than the national average. Given the age of the city’s building stock, officials see a greater need for energy efficiency retrofits and program managers expect the property owners could collectively save about $10 million in utility costs during the program’s first three years."

As an owner of a hundred-year-old row house, I am looking forward to the opportunity to apply for a PACE bond.

What do you think of this program?

Related links:

A Green Building Breakup (GBLU)

District Seeks $35M Grant for Energy Efficiency Fund (DC)

PACEnow (PACEnow.org)

Photo:  edwhitaker

Can a Green Schools Program Be Inequitable?

In Ohio, there is LEEDigation brewing.  But it's not the LEEDigaiton that I anticipated.  

The Ohio School Facilities Commission (OSFC) requires that new OSFC-funded schools achieve LEED Silver certification.  The Washington-Nile school district is balking at the additional costs incurred as a result of the LEED certification requirement.  

When a school project is pursuing LEED certification, OSFC provides three percent more funding than the estimated project costs in order to pay for the incremental costs of certification.  According to Washington-Nile Superintedent Patricia Ciraso, 3 percent is insufficient to cover the costs of LEED certification in her school district (red dot in the picture on the left):  

"'It might cover it in Columbus, or Cleveland, where you have people that deal with LEED constantly. These contractors down here, this is new to them and they’re going to have to deal with it. They’re probably going to have to bring in some people, or at least have some people trained,' she said.

To help prove the need for greater LEED funding at smaller, isolated districts, the school has retained an attorney in Columbus, with experience in school projects, to research the equity of LEED funding for schools in Ohio. Ciraso said the outcome of this battle could have local impact on LEED funding for school projects at New Boston and Clay also.

'If you are co-funding these projects and you have said silver is the appropriate LEED certification, why would you not want to fund to that level?' she asked."

I had always assumed LEEDigation would involve post-construction disputes when a project failed to achieve its green building certification.  A pre-construction dispute involving public funding for certification is a new issue, and one that could impact other state green building programs.  

Did you see this coming? 

Related Links: 

LEED Funding for Green School Causes Construction Delay (GBLU)

Important Revision to the D.C. Green Building Act

In December 2009, an Amendment to the D.C. Green Building Act of 2006 was introduced by the D.C. Council.  Labeled the "Green Building Technical Corrections, Clarification, and Revision Amendment Act of 2009," this Amendment includes many revisions to the original Green Building Act.  One of those revisions involves the "performance bond" requirement:

"'Sec. 6. Bond requirements.'.

(2) Section 6 is amended by striking the phrase 'performance bond' wherever it appears and inserting the word "bond" in its place."

That's it.  This feels anti-climatic.  We have been discussing this same issue since the dawn of Green Building Law Update.  Back on August 15, 2008, one of my very first posts pointed out the performance bond issue.  So what does this fix? 

1.  Replacing "performance bond" with "bond" will eliminate the confusion that was certain to ensue in the construction and surety industry.  Performance bonds guarantee a contractor will building according to the plans and specifications.  Here, a developer has to guarantee that a project will achieve green building certification. 

2.  I still have concerns about the bigger issue of whether these "bonds" will be available.  Bond instruments guaranteeing green building certification simply do not exist in the market.  Maybe a surety will develop these bonds, maybe they will not. 

In the end, I applaud the D.C. City Council for addressing the "performance bond" issue. 

What do you think about this revision?  Disaster averted? 

Related Links:
 

Hitting Reset on the D.C. Green Building Act

Back in April 2009, I took a vow of silence.  I promised to stop writing about the "performance bond" requirement in the D.C. Green Building Act.  I had faith the D.C. Council would address the issue.  Thankfully, it appears our long nightmare may be coming to an end.

Today, I am going to reset the "performance bond" issue (I have not written about it since April 2009!).  On Monday, I will discuss the "Green Building Technical Corrections, Clarification, and Revision Amendment Act of 2009" (pdf) and the proposed revision to the "performance bond" requirement. 

As background, for every green building mandate, you need an enforcement mechanism. The D.C. Green Building Act of 2006 requires that "after January 1, 2012, all new construction of projects 50,000 square feet or greater must comply to the LEED certification level."  Here is how I described the enforcement mechanism in a previous white paper:

"One of the most controversial provisions in the Green Building Act is the performance bond requirement.  After January 1, 2012, an applicant for construction of a privately-owned building must provide a performance bond which is due and payable prior to receipt of a certificate of occupancy.  Thus, after January 1, 2012, if a construction project must meet green requirements in the Green Buildings Act, the 'applicant for construction' must also provide a performance bond guaranteeing satisfaction of the green requirements." 

There are two primary problems with the D.C. Green Building Act "performance bond" requirement. 

1.  "The Act incorrectly uses the term 'performance bond' as the bond described in the Act 'seems to function more in the manner of a license or compliance bond, which typically guarantees compliance with a law or code.' A performance bond typically assures one party that another party will perform the contract in accordance with its terms and conditions."

2.  "Let me make this clear: no bond or insurance instrument has been created that guarantees green certification.  This type of security instrument does not exist.  I have discussed the issue with sureties, surety industry groups, insurance companies and insurance brokers.  None of them know of a security instrument that guarantees green building certification."

So what did the D.C. City Council correct either of these problems?  Check back on Monday as I continue this discussion. 

Related Links:
 
 
Photo:  Henry Stern

Green Building Regulations To Face Increased Scrutiny

A coalition of forest product companies ("the Coalition") has filed a complaint with the Federal Trade Commission (FTC) regarding, in part, the United States Green Building Council’s preference for Federal Stewardship Council-certified (FSC) wood products. The Coalition has asked the FTC Bureau of Competition to provide guidance to the USGBC and other rating systems regarding the endorsement of product certifications.

If the FTC decides to provide such guidance, the USGBC’s LEED rating system will obviously be affected.  I am particularly interested in the implications of FTC action for green building regulations that have incorporated the LEED rating system.

In its complaint, the Coalition takes a shot across the bow aimed at federal agencies that have adopted the LEED rating system:

“The favoritism shown FSC-certified products by USGBC is inconsistent with the American National Standards Institutes's (“ANSI”) due process requirements and OMB Circular No. A-119, which establishes the principles that voluntary, private sector standards must meet if federal agencies wish to use them, including openness, balance, due process, an appeals process, and consensus.”

In short, the Coalition is arguing that federal agencies are improperly requiring LEED certification for the design and construction of federal buildings. This allegation is not a new one.  Most green building regulations that require LEED certification also permit “an equivalent” certification in order to avoid antitrust issues like the ones raised by the Coalition’s complaint.

But many federal agencies exclusively require LEED certification for federal projects. The most obvious example is the General Services Administration, which builds and maintains a large percentage of federal buildings.  The GSA's website describes its LEED mandate:

“As a means of evaluating and measuring our green building achievements, all GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council.”

If the FTC were to find that the USGBC’s preference for FSC-certified wood products constitutes anti-competitive behavior, hundreds of green building regulations across the country and in Washington D.C. will have to be re-written.

The implications of the FTC action on the complaint are staggering.

What other implications do you see?

Related Links:

Photo:  Eighty734

USGBC Accused of Anti-competitive Practices

We may be settling into 2010, but one unresolved legal development in 2009 could have a broad impact on the future of the green building industry. On October 20, 2009, the Coalition for Fair Forest Certification ("the Coalition") filed a complaint with the Federal Trade Commission (pdf), alleging anti-competitive behavior by the Forest Stewardship Council (FSC) and the United States Green Building Council (USGBC):

"[T]he Coalition asks that the FTC investigate through the Bureau of Consumer Protection the deceptive and unfair trade practices arising out of FSC’s forest certification standards; investigate through the Bureau of Competition concerns about anticompetitive activities and monopolization arising out of USGBC’s LEED rating system and preference for FSC-certified products; and provide guidance to standard-setting organizations concerning behavioral standards for compliance with antitrust law."

My law firm represents many of the forest product companies involved in this complaint (another law firm submitted the letter), so I will not be discussing the allegations made against the FSC. Nor will I debate the merits of one wood certification versus another. But I will continue to keep you updated on the status of this complaint and I will be discussing allegations made against the USGBC and the potential impact of these allegations on green building regulations.

First, some background on the connection between USGBC, LEED and FSC:

"Under the LEED system, points can be awarded in five categories: sustainable sites, water efficiency, energy & atmosphere, materials & resources, indoor environmental quality, and innovation & design process. Credit 7 under the materials & resources category addresses the issue of certified wood, with the intent of encouraging environmentally responsible forest management. The requirements for the credit are:

'Use a minimum of 50% (based on cost) of wood-based materials and products, certified in accordance with the Forest Stewardship Council’s Principles and Criteria, for wood building components including, but not limited to, structural framing and general dimensional framing, flooring, finishes, furnishings, and non-rented temporary construction applications such as bracing, concrete form work and pedestrian barriers.'"

According to the Coalition’s complaint, forest product companies that do not supply FSC-certified wood can not contribute to LEED materials & resources Credit 7: "[T]he three standards most widely adopted by forest owners in the U.S. and Canada - SFI, the Canadian Standards Association ("CSA") Sustainable Forest Management Standard, and the American Tree Farm System - receive no points under LEED, creating a substantial disadvantage for American-sourced wood products."

Among other actions, the Coalition has asked the FTC's Bureau of Competition to investigate the USGBC’s preference for FSC-certified wood:

"The Coalition also believes that the exclusionary actions of USGBC and its exclusive endorsement of FSC-certified products . . . warrants investigation by the Bureau of Competition concerning issues of possible monopolization, attempt to monopolize and conspiracy to monopolize the fast-growing certification marketplace. In examining the issue, the Coalition invites the FTC to use USGBC as a case in point to provide specific guidance to USGBC and other standard setting organizations."

It’s this last sentence that has really caught my attention.  

How do you think the FTC should respond to the Coalition's complaint?

Related Links:

Photo:  Travelin' Librarian

New York City Backs Off Retrofit Requirement

Well, that did not last long.  Two weeks ago, we wrote about Mayor Michael Bloomberg's plan to require retrofits of existing buildings.  After vehement opposition, Mayor Bloomberg has backed off of his plans to require retrofits:  

"The plan, which the owners said was too costly, called for all buildings of 50,000 square feet or more to undergo audits to determine which renovations would make them more energy efficient, and for owners to then pay for many of those changes.

The mayor wants to go forward with the proposal to require energy audits, but now is leaving it up to the building owners whether to undertake the changes called for by those audits."
Not surprisingly, opponents cited the economy as one of the prohibitive factors to implementing the mandatory retrofitting:
“It’s another unfunded mandate, and this is just not the time for it,” said Stuart Saft, chairman of the Council of New York Cooperatives and Condominiums, an opponent of the plan. “Come back in five years when we’re past this recession. At this point it’s just a slap in the face.”
Green building legislation has developed quickly over the last ten years.  Cities like New York City and Washington, D.C. previously pushed the envelope by requiring all new construction achieve green building certification.  The New York City proposal would have taken the next step in requiring existing buildings to incorporate green building features, like energy efficient windows and HVAC systems.  

Opposition to the New York City legislation suggests the real estate industry is not prepared to retrofit all existing building stock.  The legislation was an enormous leap for an industry that continues to wobble through the recession.  

What do you think the rejection of the New York City legislation suggests?  
 
Related Links: 
 
 
 

Cities Will Soon Regulate Energy Use

The future of green building regulations usually starts in big cities. Cities like San Francisco, Washington, D.C. and New York City were some of the first to incorporate green building certification into regulations and building codes. The next frontier in green building regulations will be energy performance and New York City seems to be at the forefront. The New York Times recently reported this anecdote about future New York City green building policy:

The New York City Council is drafting a law that will dispatch auditors to measure large buildings’ energy use, with potential fines for landlords who fail to retrofit their systems.

There are other examples of regulations focused on energy efficiency:

The United States Green Building Council is also modifying its LEED rating system to reduce actual energy usage. With the launch of LEED 2009, the USGBC now requires the reporting of energy data. As we reported in September, Scot Horst, USGBC executive, has stated that the LEED certification will eventually require buildings to achieve a specified level of energy performance.

The eyes of the green building industry are focused on energy efficiency. You should be too.

Related Links:

In Washington, DC, Energy Star Benchmarking Law Arrives (CoStar Group)

The Future of LEED: Re-certification (GBLU)

So Who Left the Lights On? The System Knows (NYT)

Super Star Green Label Proposed (GBLU)

Can Green Building Regulations Keep Up?

The Energy Star program, responsible for certifying energy efficient products, is about to undergo some major changes. Recently, the program, run by the Environmental Protection Agency (EPA) and the Department of Energy (DOE), has come under fire from a number of groups:

"Various stakeholder groups, such as manufacturers, utilities and even Consumer Reports , the monthly magazine published by the Consumers Union, have complained in recent years that Energy Star . . . is too inclusive. An internal audit of the program by the Department of Energy found that there is inadequate tracking of whether the appliances have actually met the required specifications for energy efficiency."

The New York Times article lists three primary complaints with the Energy Star program:

1. Too many products are achieving the Energy Star rating, casting doubt on whether evaluations have been properly performed.
2. The program has been slow to keep up with technical advancements.
3. The program has been hamstrung by jurisdictional disputes between EPA and DOE.

The complaint that the Energy Star Program has failed to keep up with technical advancements was of particular interest to me, as it may foreshadow problems with green building regulations that incorporate rating systems. Like green products and appliances, the green building industry and building rating systems are constantly evolving through technical advancements. For example, with the launch of LEED 2009 (which replaces LEED 2.2), the United States Green Building Council's LEED rating system will now be revised every two years.

Here's my concern: as I have written about numerous times, many green building regulations require LEED or other green building certification. Many jurisdictions have created green building regulations that incorporate the previous version of the USGBC's LEED rating system, LEED 2.2.

How will these jurisdictions keep up with advancements in green building rating system?

Related Links:

Congress and Agencies Debate an Overhaul to the Federal Energy Star Program (New York Times)

Allegations Emerge of High Formaldehyde Levels in Green Buildings

When I have previously speculated as to green building lawsuits, I never imagined that an industrial hygienist would play a significant role.

Industrial hygienists are scientists and engineers who study health and safety of people in the workplace and the community. Linda Kincaid is an industrial hygienist in California. She is also a citizen-reporter for the San Jose Environmental Health Examiner. Turns out, Kincaid has recently been testing Los Altos homes for formaldehyde. Kincaid alleges that Los Altos homes are emitting more formaldehyde and that a green building rating requirement may be the culprit:

[According to Kincaid], of homes with more than 100 ppb formaldehyde, nine out of eleven were in Los Altos. Of homes with more than 120 ppb formaldehyde, three out of four were in Los Altos. Over half of the homes tested in Los Altos had more formaldehyde than the 77 ppb average in the Katrina FEMA trailers.

Initially, we could not understand why homes in Los Altos were different from homes in nearby communities. Construction practices and construction materials should be similar throughout the county. The difference, [according to Kincaid,] was a green building ordinance passed by the City of Los Altos in late 2007. Beginning in January 2008, all new homes in Los Altos were required meet the criteria for GreenPoint Rated.

Kincaid's accusation is a big one. She is alleging that homes that are certified under the GreenPoint Rated system, which is mandated by the City of Los Altos, have higher levels of formaldehyde.

Kincaid's first article of September 8 drew a swift response. The
Formaldehyde Council, Inc. published a scathing critique of Kincaid's analysis, as did Build it Green, publishers of the GreenPoint Rated certification system. From the Build it Green website:

Build It Green found the information in the articles quite inflammatory and simplistic, with an elementary perspective on the realities of any green building rating system and the US construction marketplace. Ms. Kincaid also severely misrepresents the standards and intent of California’s regulatory safeguards in place to help protect homeowners from actual risks of formaldehyde offgassing. Ms. Kincaid’s testing methodology is highly questionable, her conclusions overly simplistic and spurious. Her articles do the opposite of supporting the need for good comprehensive information regarding the realistic dynamics occurring in today’s homes.

There is, of course, more to the story, which we will discuss on Friday. If residents were hypothetically getting sick from formaldehyde in green certified homes, could a green building rating system be responsible? Could a city or county, which mandated the green building certification, be responsible? Architects and contractors who built the homes also have to be concerned about liability implications.

What is your take?

Related Links: 

What is an Industrial Hygienist?  (AIHA)

Elevated formaldehyde in new Los Altos Homes (Examiner)

FCI Reponds to Linda Kincaid Articles (FCI Blog)

Build It Green Responds to Recent Articles by Linda Kincaid (Build It Green)

Photo:  timlovesbrian

District of Weatherization

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Sometimes, my fair city of Washington, D.C. can drive me crazy. There is no doubt we have our issues.

But one thing Washington, D.C. has going for it is its push to become more green. D.C. is at the forefront of the green building movement and it is taking full advantage of American Recovery and Reinvestment Act funding:

The District of Columbia will receive $8.1 million in federal funds to support its weatherization programs for low-income residents. The funding is part of a United States Department of Energy grant to the District under the American Reinvestment and Recovery Act. It will allow the District to weatherize an additional 785 homes over the usual workload of about 400 in the same period.

I have received a number of inquiries about the requirements for eligibility under the weatherization program. Here are the income requirements in D.C.:

If you have questions about eligibility for the weatherization program in your region, I would recommend reviewing the website dsireusa.org.

Finally, here is a great video put together by the White House about the D.C. weatherization program. This has me feeling (gulp) hopeful. Watch this and tell me Van Jones is not the coolest environmentalist on the planet.

 

Links:

District To Weatherize Hundreds of Additional Homes (DDOE)

Database of State Incentives for Renewables & Efficiency (DSIRE)

Green Jobs for a Green Future: Weatherization (YouTube)

Reporting Green Jobs is Tricky

If you are a contractor lucky enough to have won a stimulus project, one of the pesky requirements attached to the project is reporting the number of new jobs created by the project.  Many builders and contractors have been wondering how exactly to do that.  Finally, at long last, the White House has provided clarity

''Just count the people being paid out of Recovery Act dollars,'' said Rob Nabors, deputy director at the White House budget office.

 

Wait, that didn't answer all the questions out there.  If someone was already working for you, do they count?  What about subcontractors?  If you receive multiple stimulus contracts and employ the same person for both jobs, is that one job or two?  Maybe there is further clarification:  

''This whole thing is tricky. I'm not going to pretend it's not,'' Nabors said. ''This whole effort is virtually unprecedented.''

Oh, now I get it!

The reporting of ARRA jobs is going to be an extremely confusing and important issue for all parties. Back on June 22, I wrote:  "As we draw closer to the 2010 election cycle, you can bet that politicians who supported the ARRA will be looking to tout green jobs that were created." 

Turns out, the federal government isn't the only one hoping to tout good job creation numbers:

If the numbers are to be reliable, however, states, cities and contractors must report honestly. White House officials know there are political and financial incentive to cheat: Contractors can use job-creation data as a public relations ploy. Local politicians can turn job numbers into campaign literature. And states that use the money well could be in line to get more of it.
 
In the absence of these rules, some states have announced jobs based on out-of-date formulas, leading to implausible estimates. Ohio officials, for instance, have estimated that a $20 million bridge construction project will create or save 10,500 jobs.

As funds for green building projects start flowing from the General Services Administration and the Department of Energy, everyone will be paying attention to the number of green jobs created by these agency projects.  If you have to report green jobs, be extra careful that you follow the reporting requirements, whatever those requirements may be.

Photo:  talkradionews

Has Canada Figured Out Green Roof Insurance, Eh?

A few weeks ago, Toronto announced a mandatory green roof requirement, which my fellow bloggers dutifully covered.  When I read about the green roof mandate, I thought of another Canadian city with a similar program. 

You remember the Vancouver Catch-22, right

Many British Columbia jurisdictions, including Vancouver, began mandating green roofs.  Simultaneously, the Homeowner Protection Office required homeowner's insurance covering roofs for new developments.  A resourceful government official with the Homeowner Protection Office did some digging and sent out a letter emphasizing that insurers would not issue policies covering green roofs.

In the end, the Homeowner Protection Office had to call a meeting with the insurers, the building industry and government officials to find a solution.  Quite embarrassing. 

When I read about the Toronto green roof mandate, I thought to myself "good for Toronto, they ironed out all of the insurance and liability issues associated with green roofs."

Not so fast

Marks says, however, that green roofs built to the Toronto construction standard won’t be able to pass Underwriters Laboratories of Canada’s CAN/ULC S107-03, Methods of Fire Tests of Roof Coverings. “Under the flame-spread test, they shoot a flame across the top of a traditional roofing membrane,” says Marks. “There isn’t one green roof that will pass that test — the vegetation will burn, and the City of Toronto has been aware of this.”

Marks notes that the insurance sector is generally reactive to emerging issues, not proactive.

“The insurance industry hasn’t caught up with this yet,” he says. “They may need to experience some losses and claims before clueing in.”

I am no engineer but I am pretty sure grass catches on fire if you shoot a flame at it. 

The green building industry is a brave new world.  How long will it be before the insurance industry can assess the risks associated with green roofs and projects?  

Photo:  Earth Hour Global

A Green Building Breakup

The BreakupDear Feebate,

I'm sorry to be writing this.  First, I have to say, it's not you, it's me. You have done nothing wrong.

I remember when we met back at Greenbuild '08. The Portland officials were very eager to show you off and I fell for you hard. You were everything I dreamed of in a green building regulation. You weren't quite a mandate, but you strongly encouraged green building certification. Projects that did not achieve LEED certification were penalized; projects that achieved LEED Gold or Platinum certification received a reward.

It has been a long distance relationship and my eye has wandered. I have become increasingly focused on retrofits to existing buildings. How are we going to improve the energy efficiency of existing building stock?  You always refused to answer this question when I asked.

Then, she appeared.  PACE.

PACE bonds - Property Assessed Clean Energy bonds. PACE bonds are just so beautiful to me. What is a PACE bond you ask?

PACE is a bond where the proceeds are lent to commercial and residential property owners to finance energy retrofits (efficiency measures and small renewable energy systems).  OWNERS then repay their loans over 20 years via an annual assessment on their property tax bill. PACE bonds can be issued by municipal financing districts or finance companies and the proceeds can be used to retrofit both commercial and residential properties.

My dear Feebate, PACE bonds are everything you are not.  PACE bonds focus strictly on creating a market for energy efficiency retrofits or renewable energy. PACE bonds are not mandates; instead, individuals must willingly agree to opt in. PACE bonds can be set up by private companies or government entities. The best part, though, is that a PACE bond can turn into a revolving fund that creates even more retrofits.

So Feebate, thanks for everything. It's been a nice ride and I wish you luck.

Best Wishes,

Green Building Law Update

Some Cities Are Not Ready for Green Stimulus Funding

Back on February 20, 2009, I said the following about the American Recovery and Reinvestment Act:

While Republicans, Democrats and the President argued over the stimulus package for weeks, the real battle may arise when state agencies and officials attempt to divide up the stimulus funding and choose the projects that receive funding.

The real battle is now upon us.

The New York Times has written a fascinating article highlighting the benefits, and potential troubles, associated with clean-energy stimulus funds that will soon begin flowing to cities and towns. The article really paints a picture of potential waste and "headache" that may result from these funds. I was particularly struck by this section:

But the sudden flow of federal funding is raising questions about whether many of these communities are really ready for it.

Some 1,000 cities and counties have direct access to the new entitlement account, the Energy Efficiency and Conservation Block Grant Program. They have until June 25 to submit plans, but that's a challenge, because most haven't received federal grants for energy projects before.

Many communities are having trouble retaining enough police officers, let alone hiring sustainability professionals who understand how to establish energy efficiency programs that will evolve into long-term savings in power and money, experts say.

"Some cities are ready for this, others aren't," said Mark Wolfe, executive director of the Energy Programs Consortium, which helps state energy programs establish efficiency policies.

Many cities are using the stimulus funding for energy efficiency retrofits or even LEED certification:

  • "Las Cruces expects to receive $888,000. Henry said it will help pay for a solar array and "all the green stuff" on an old adobe bank the city is converting into a natural history museum that will be certified under the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) guidelines. The project will cost about $6 million."
  • "Take El Paso, Texas. The sprawling city is due to receive $5.8 million in energy efficiency grants. It will use $3 million of that to help finance a $15 million "performance contract" program aimed at cutting energy use 30 percent in 52 public buildings."

According to the article, in a recent meeting, the DOE also suggested that cities and towns could use the funds to create "carbon trading markets." I don't know about you, but municipal officials new to environmental policy might be better served retrofitting existing buildings instead of creating a complicated, regional carbon trading market.

Feebate, Stretch Code Options for Dillon's Rule States

In previous posts I have talked about Dillon’s Rule and the impact this rule has on green building regulations in Virginia.  Dillon’s Rule provides that the state retains all powers except those specifically carved out for municipalities and counties.  You can think of this as the reverse of the federal system, where all powers not enumerated in the Constitution to federal authorities are then devolved to the states.  So if a Dillon’s Rule state has a statewide building code, like Virginia, cities are limited in the green building regulations they can enact. 

Arlington County has found a way to implement a green building policy despite Dillon's Rule.  What other options are out there for municipalities located in Dillon's Rule states? 

You may recall that I have highlighted the Portland Feebate system as a common sense green building regulation that others should mimic.   After reading more about the Feebate structure, I recently learned that the Feebate system works particularly well for Dillon’s Rule states:

According to Vinh Mason at the Portland Bureau of Planning and Sustainability, the new policy came about in part because Portland cannot institute a building code that is more stringent than the statewide code.

Lets not stop there, though.  I also came across another option for Dillon’s Rule states looking to implement green building regulations when reading Green Building Law Blog's post regarding a new Massachusetts building code.  According to the Board that passed the new code, implementation would be optional at the city level:

[T]he stretch code would be incorporated into the Massachusetts building code as an optional appendix.  Towns and cities in Massachusetts would then be able to choose between remaining on the base energy code or adopting the stretch energy code as their mandatory energy code requirement.

Which option do you prefer, the Feebate or the stretch code?  Got any better ideas? 

Concern Remains Regarding Some LEED Mandates

In addition to clarifying the LEED 25% guideline, Rob Watson also had some interesting points regarding regulations that required LEED certification.* 

First, Watson made a great point about governments requiring municipal projects to achieve LEED certification:  "As far as municipalities requiring their own buildings to go LEED, that's an owner decision and no problem.  Municipally-funded projects are in a similar vein."  I wholly agree with Watson. 

I still remain concerned about private development LEED mandates.  Watson indicated he also has similar concerns:  "It gets a bit dicey when talking about broader mandates because we designed LEED as a market-leading standard and there is concern about the market's ability to respond on a very broad level.  As penetration of green accelerates, I believe this will become less of a problem."

What do you think?  Can LEED mandates for private projects work?

*To be clear, Watson was speaking to me as the CEO of The EcoTech International Group.  He was not speaking on behalf of the USGBC. 

The Green Impact Zone

As readers may know, I am a die hard Kansas Jayhawk basketball fan.  Our main rival is the Missouri Tigers.  So if I discuss something that originates from Missouri, you better believe that the Missourians have come up with something extraordinary. 

U.S. Representative Emanuel Cleaver has established a plan for an innovative "Green Impact Zone" in Kansas City, Missouri that will be funded through the American Recovery and Reinvestment Plan funds: 

U.S. Rep. Cleaver, D-Missouri, has developed an ambitious plan for a “Green Impact Zone” to be established in a 150-block area east of Troost Avenue. He convinced the Kansas City Council to vote 13 to 0 to allocate millions of dollars of ARRA money and considerable city effort to this part of the city. . . . Now Cleaver’s office and the team from the community are submitting applications to numerous Recovery Act programs, supplementing work that’s already begun to bring a greener, healthier environment to this area and jobs to its residents.
 

So far, the Green Impact Zone involves three primary plans:

1.  At the heart of the plan for the Green Impact Zone is a massive home weatherization project that would put area residents to work conducting energy audits and weatherizing the 2,500 homes in the Zone neighborhoods.

2.  Another key piece of Green Impact Zone plan is developing a green bus rapid transit system that would use bio-diesel buses and green bus shelters.

3.  A third piece is developing a job training and employment program for ex-parolees in green building, park restoration and transit work. 
 

Not only will the buildings and homes in the Green Impact Zone be more energy efficient, but the residents can fill the jobs to weatherize these buildings and homes.  Even major utilities are going to contribute to the Green Impact Zone: "Kansas City Power & Light, the major utility in the area, is helping out with a commitment to build a smart electricity grid for the Green Impact Zone."

Do you see any problems with this plan?

Stimulating Green Guide to the ARRA

Back in March, I gave a presentation about green building funding available through the American Recovery and Reinvestment Act ("ARRA").  I had planned to convert the presentation to a guide of sorts, but more pressing matters arose. 
 
I have now discovered what I hope the guide would have looked like if I had a month to work on it. 
 
Thanks to the fine folks at the Green Research Council, I was able to review their publication, "Green Guide to the 2009 Stimulus Package."  This guide is packed with information about the American Recovery and Reinvestment Act.  The Guide starts with a review of the stimulus and where to get information about particular projects being funded.  I have been telling people that due to transparency demands of the Obama Administration, there is a ton of information available about the stimulus projects.  The Guide does a great job bringing all of the information together in one place. 
 
The Guide goes on to provide information about stimulus funding for Department of Energy initiatives, energy tax credits, EPA environmental projects and green building initiatives.  Finally, the Guide wraps up with general advice for those seeking to procure green projects or jobs. 
 
If you want eighty-eight pages of useful information regarding the green components of the stimulus, this Guide is well worth the $30. 

Why LEED Mandates Do Not Add Up

On Wednesday, we discussed the LEED 25 percent rule: the LEED rating system was only intended to apply to the top 25 percent of buildings.

It is important to remember this premise when considering what is happening in the green building industry today. Many cities are mandating LEED certification for public and private buildings. For example, in Washington D.C., all new construction of private buildings greater than 50,000 square feet will have to be LEED certified after January 1, 2012.

As cities, states and federal agencies are mandating LEED certification, you simultaneously have the USGBC "raising the bar" for green buildings by bi-annually updating the LEED rating system to include even more stringent requirements for certification. The USGBC's goal is not for every building in the country to be LEED certified. Instead, the USGBC wants "to bring in even greener and greener buildings."

You see the problem there. I know you do. But I will say it anyways.

Mandates require 100 percent compliance.

The USGBC is designing a system that only the leading 25 percent of buildings can comply with, at least in terms of certification.

Those two numbers do not add up.

D.C. Councilmember: Lack of Green Incentives Unfortunate

The Washington D.C. government has recently began incorporating Social Media 2.0 into its public outreach.  Agencies have Facebook pages, some are on Twitter and officials have even taken to participating in online chats with the public

I was very excited to learn that Councilmember Mary Cheh was conducting one of these online chats last Friday.  Cheh is the chairperson of the Committee on Government Operations and the Environment and very interested in the operation of the D.C. Green Building Act of 2006.  You may recall that I spoke at a D.C. Public Hearing on Green Building that was convened by Councilmember Cheh.  During the hearing, Cheh demanded accountability from those responsible for implementing the Act. 

After reading the chat, I am optimistic about the future of green building regulations in the District: 

1:37    [Comment From SG]
How can the DC government incentivize "green roofs" for private citizens to make it extremely cost-effective for average citizens and businesses to install?

1:41    Mary Cheh:  We are moving to do just that. The RiverSmart program, by DDOE, provides grants for mitigation of storm water outflow at residential properties. It could be used for green roofs. Anyone interested should check out the DDOE website at ddoe.dc.gov. Unfortunately, at the moment, for our businesses, we don't have much by way of incentives and we are relying more on a stick approach, which will make it more expensive for businesses if they fail to deal with water runoff. DDOE has a Business Outreach specialist who can offer advice on strategies for green roofs and other environmental initiatives.

Cheh's comment that it is "unfortunate" that there are not more incentives for green roofs has me optimistic that Cheh also supports further incentives for green building development.  The problem Cheh faces, of course, is that Washington, D.C. has very limited funds for incentive programs. 

So here's my proposed plan:  the D.C. Feebate.  Modeled after the Portland Feebate, D.C. could set up a separate green building fund.  If a project fails to achieve LEED certification or equivalent, the project pays a fee into the city fund.  If a project achieves LEED Certified or Silver certification, nothing happens.  Here's the kicker:  if a project achieves LEED Gold or Platinum, the project will get a rebate back from the fund. 

What do you think?
 

D.C. Energy-Efficiency Funds for Solar, Reusable Bags

When you heard that the Department of Energy would be providing $3.2 billion for Energy-Efficiency and Conservation Block Grants to states, what kind of programs did you have in mind?

I imagined weatherization of the leaky, old buildings in Washington, D.C.  I imagined an incentive program to build green in D.C.  I am imagined solar panels on every row house.  The last one is out there, but you get the point.  It appears that D.C. will use its Department of Energy funds for some solar panel development and for an advertising campaign that includes distribution of reusable canvas bags: 
"In D.C., environmental leaders have split the District's pot between $4.8 million for solar panels on 20 schools and curriculum additions to help those students be watchdogs for energy waste in their schools, as well as a $3.5 million advertising campaign that includes distributing canvas bags and compact fluorescent lighting to residents in exchange for plastic bags and incandescent bulbs." 
Funding solar panels on schools is a great idea.  Even better, the District plans to tie the program into school curriculum.  By getting the kids involved, D.C. will now have hundreds of eyes on school energy use and the students themselves can work to reduce their energy usage.  Makes sense to me. 

In order to make sense out of D.C.'s use of stimulus funds for canvas bags, you have to understand broader political issues in the City.  The Washington Post recently reported "a majority of the D.C. Council supports legislation that could tax not only plastic bags, but paper ones" at $.05 a pop.  Opponents are now gearing up to oppose the plastic bag tax.   By using stimulus funds to provide reusable bags to residents, the D.C. Council likely faces less opposition from its constituents.

I have no desire to debate the merits of the plastic bag tax, although you can discuss the issue further in the comments section.  Instead, my question is whether the purchase of reusable bags is an appropriate use of Energy Efficiency and Block Grant stimulus funds.  Thoughts

D.C. Adopts Renewable Energy Rebate

This week, I want to tell you about new green building developments in the D.C. metropolitan area. 

I like incentive programs related to green building.  D.C. recently came out with a solar rebate program that will most definitely increase the installation of renewable energy systems:

Beginning February 23, 2009, the program will provide rebates to eligible applicants to assist in the installation of a solar photovoltaic or wind turbine renewable energy system. Additional technology rebates are forthcoming in the second quarter of 2009 as regulations are adopted. Projects may include but are not limited to the installation of systems on single- and multi-family dwellings, as well as commercial and institutional buildings. 

Of course, I have to discuss some legal implications from this program.  D.C. is relying on a tried and true enforcement mechanism, the lien:  

Rebates will remain active for a period of six months (6 months) from the date of the award. The incentive contract requires installations to be completed in 6 months. If the system is not completed within 6 months, the system owner may request in writing a six-month extension. If an extension is not requested and/or the project timeline exceeds 12 months from the award date, the applicant is to return the rebate to DDOE. Failure to return the rebate will constitute a lien on the owner's real and personal property to secure repayment.

Filing liens on property in Washington, D.C. is not easy.  Releasing liens is even more difficult.  Are property owners and the District prepared for lien battles if problems do arise? 

Photo:  Jared Zimmerman

DC's Green Bond: The Worst Case Scenario

On Wednesday, we looked at the best case scenario that can result from the D.C. Green Building Act "performance bond" requirement.  We assumed that the green building "performance bond" was created.  The scenario was not pretty and involved extensive LEEDigation™ . 

Today we look at the worst case scenario. 
 
Imagine no new construction projects in D.C.  Imagine an emergency meeting with Mayor Fenty, Councilmember Cheh, major developers and the Surety and Fidelity Association of America and the National Association of Surety Bond Producers.  Sound far fetched?  It's not. 
 
I call this scenario the "Vancouver Catch 22." 
 
See, Vancouver went down the same road as Washington, D.C.  Many British Columbia jurisdictions, including Vancouver, began mandating green roofs.  Simultaneously, the Homeowner Protection Office required homeowner's insurance covering roofs for new developments.  A resourceful government official with the Homeowner Protection Office did some digging and sent out a letter emphasizing that insurers would not issue policies covering green roofs. 
 
What was the result? 
 
No coverage means no new residential developments.  This has left developers caught between the possibility of being mandated by city governments on one hand and shut out by insurers on the other. 
In the end, the Homeowner Protection Office had to call a meeting with the insurers, the building industry and government officials to find a solution.  Quite embarrassing.  A similar scenario could arise in D.C. if the City mandates green buildings and requires green building "performance bonds" but sureties refuse to issue the bonds. 
 
I know D.C. is working hard to resolve the bond language so this will be my last post for some time on this issue.  Which scenario do you think is most likely to occur?

 

D.C.'s Green Bond: Best Case Scenario

Today I am speaking once again on the D.C. Green Building Act "performance bond" issues (see slides in this post).  I have a new message for this presentation because, frankly, I am not certain we are getting anywhere.  If you need some background, here are all of the Green Building Law Update posts regarding this hot topic
 
I have come up with a best case and worst case scenario for the D.C. green bond requirement.  Make no mistake, neither scenario is very good.  Here is the best case scenario. 
 
First, the surety industry is able to come up with a bond that works for the Act's bond requirement.  Even better, by mandating green building, D.C. has more green buildings then any city in the nation.  
 
But here is where things start getting bad.  Some projects fail to achieve LEED certification.  The District of Columbia then has to call on the bond.  The Surety has two options at this point.  Either the Surety can forfeit the bond amount to D.C. or the Surety can defend the debtor (in this case the developer) against D.C.  In both scenarios, LEEDigation will ensue. 
 
What will this LEEDigation look like?  The Surety will file a lawsuit against the Architect or Contractor, blaming them for the project's failure to achieve LEED certification.  The Architect will file an additional lawsuit blaming the Contractor, or vice versa.  Oh, and the Architect will also file lawsuits against all of the Engineers.  The Contractor will go a similar route and sue all the Subcontractors. 
 
This is the best case scenario. 
 
When you mandate green building certification and require an enforcement mechanism, you are ensuring there will be failures.  Those failures will lead to LEEDigation.  Bottom line, best case scenario?  D.C. becomes the hotbed of LEEDigation. 
 
Unless of course some other jurisdiction implements another LEED mandate sooner. 
 


 

Energy Department Releases Funding Amounts

[Sometimes, it's better not to reinvent the wheel.  As I was preparing this week's posts, I came across Lane Burt's analysis of the Department of Energy's (DOE) stimulus funding.  Lane, an NRDC Policy Analyst, agreed to let me use his post today.  Check out Lane's blog - it's a great resource for energy policy analysis.]   

DOE released the funding distribution for the Energy Efficiency and Conservation Block Grants (EECBG) from the recovery act (ARRA) late last week. With this action, we now know as much as we are going to about the destination of the clean energy dollars.

The big ticket items for clean energy were,

  • $5 billion for low income weatherization (WAP)
  • $3.1 billion for state energy programs (SEP)
  • $3.2 billion for the local block grants (EECBG)
  • $4.5 billion for greening GSA facilities

I blogged on the funding breakouts here and here,

We aren't going to get more clarity on the destination of the GSA funding. GSA has a list of projects across the country, but details have yet to be released and GSA is not required to do so.  [Ed. The GSA released its project list after this post.]

The money for state energy programs and low income weatherization is distributed according to an existing formula that sends a baseline allocation out and divides the remainder, 1/3 weighted according population, 1/3 by consumption, and 1/3 equally. The text of the law is here,

Now, DOE has released the funding amounts for EECBG and a nifty little interactive map so you can see where all the funding (SEP and WAP included) is headed.  More detailed state by state info here, including city by city breakouts for the local block grants.  A few clicks show me that my home state of North Carolina is getting $266 million dollars and my hometown of Charlotte is getting close to $7 million of that.  New York recieves $693 million, California gets $764 million and Texas gets $755 million.

Decision time

DOE is doing everything they can to get this money out now. How it gets spent (in the case of SEP and EECBG) is now a state or local matter and there is a lot of discretion given to states and localities on how to spend it. The potential impact of this money is incredible if used properly to save energy and create jobs, but the potential for waste is also very high.

Because of the potential for waste, there are two words that should guide every state, county, and local official in spending this money - Prioritize Efficiency. I cannot say this enough. It is faster, cheaper, and cleaner than any alternative and it is the only way we can spend now to save us money in the future. It supports local jobs and keeps dollars in the local economy. No one can find a stimulus proposal better than the one that will leave you with more money than you started with in just a few years.

Green Bonds, Car Insurance Not the Same

If you have been paying attention to Green Building Law Update, you know D.C. has a bit of an issue regarding a green building "performance bond" currently required by law.  In short, green building "performance bonds" do not exist.  A few weeks ago, George Hawkins, Director of the District Department of the Environment, testified in support of the use of “performance bonds” as a method of enforcing the District’s Green Building Act (PDF link).  Among the comments that caught my attention, Mr. Hawkins stated that green building performance bonds will be created just as car insurance was created: 
"For example, before there were automobiles, there was no such thing as car insurance.  When the law recognized a growing need to insure against harms that may be perpetrated by automobile drivers to others, the market rose to the demand." 
I made a note to research this specific issue.  Thankfully, I didn't have to do the research.  Will Clark, multi-family housing expert and budding renewable energy entrepreneur, provided a critique of Mr. Hawkins' testimony that deals specifically with the auto insurance claim.  

Automobiles were invented in the mid-1890s. Although various vehicle insurance schemes existed in the late 1890s through the first decades of the 1900s, Massachusetts was the first state to make vehicle insurance compulsory in 1927. New York was the second state to make vehicle insurance mandatory, in 1956. The 'invention' of automobile insurance clearly preceded the state's mandating of such coverage. The DC GBA reverses this precedent by mandating something for which no appropriate instrument exists.

More directly, auto insurance is an extension of tort law, and vehicle insurance exists to compensate a party for its loss, whether personal or property. These loses are either known (cost of repair or treatment) or negotiated. In the case of the DC GBA, the compensated party (District's Green Building Fund) is not the party of loss.  Regarding forfeiture, the legislation states "All or part of the performance bond shall be forfeited to the District and deposited in the Green Building Fund if the building fails to meet the verification requirements." There is no method in the legislation to negotiate (or dispute) the severity of loss or even identify the loss. Certification of LEED projects is made by the US Green Building Council (USGBC), a non-governmental entity, and includes a mix of objective and subjective requirements. Because a failure to achieve the desired certification could be the result of subjective failures, a surety bond is an inappropriate method to ensure compliance.
Will's entire critique is available after the jump.  To be honest, I am not sure I agree with all of Will's points, but I hope this sparks debate.  Like Will, I am not entirely convinced that the Green Building Act creates an inherent conflict of interest.  I am extremely concerned that a bond instrument will not be on the market when the time comes (more on this in a future post). 
 
Will also raises the much bigger question, should LEED be included in government regulation?  I have not committed one way or the other yet and I would love to hear your thoughts.   

Photo:  Larry Miller

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Green Building Thoughts: The Stimulus, The Bond, LEED AP, and Rock Chalk

It may surprise you to learn that I have a real job.  Seriously, I do and I love it!  I am a construction litigator and I am currently involved in a major construction delay claim.  I have been preparing a motion the last few days, hence the late filing of today’s post. 

There is a lot going on in the green building world.  The Stimulus.  D.C.’s unique green building bond (i.e. the green building unicorn).  LEED AP exam deadlines.  And also a little basketball.  I often don’t have time to touch on all the issues I would like, so today, I provide you my thoughts on these many issues. 

The stimulus.  In my “Green in the Stimulus” slideshow, I indicated that the General Services Administration has until April 3, 2009 to prepare a list of federal projects to receive stimulus-funding.  While that is true, apparently the GSA does not intend to release this list on April 3:  “Morris said a list of stimulus-funded projects is being vetted by the administration, but he could not give a date for the list’s release.”  Stay tuned for further details.

The D.C. Bond.  You may have noticed that I have been writing a lot about the D.C. Green Building Act's performance bond requirement.  It seems the issue takes a new turn everyday.  The most recent rumor is that the D.C. may incorporate the green building bond into zoning requirements.  How are we going the wrong way on this?  Look for a guest post next week on the issue. 

The LEED AP Exam.  I get a lot of google hits from people trying to decide if they should take the LEED AP exam.  My general thought is that if you are interested in a career in green building and you have some free time and money, you should take the exam.  You do know the deadline to sign up for the LEED AP exam is March 31, right?  Also, the Green Building Certification Institute recently announced that you actually have to take the LEED AP exam by June 30, 2009.   

The Defending Champions.  Finally, it is my favorite time of year.  It is the time of year when the University of Kansas Jayhawks take flight.  In addition to my job and this blog, I also am just a little bit COMPLETELY AND UTTERLY (ed: my fiancee made this change) obsessed with Kansas Jayhawks basketball.  Always have been, always will be.  I hope Sherron Collins, Cole Aldrich, Bill Self and company continue rolling and dispatch of the Spartans in quick fashion tonight.  Rock Chalk Jayhawk! 

Photo:  ruralocity

Hawkins: Green Building Performance Bond Requirement is Viable

Last week, I had the pleasure of testifying before the D.C. Council regarding green building policies in the district.  As mentioned in my post last week, the focus of my testimony was the Green Building Act's "performance bond" requirement.  Before my testimony, I had the opportunity to hear George Hawkins, Director of the District Department of the Environment.  During his speech, Mr. Hawkins directly addressed the "performance bond" issue and many of the points I raised in my White Paper last Wednesday.  After you review Mr. Hawkins testimony, I would be very interested in hearing your thoughts. 

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“Performance Bond” Requirement for Private Projects

I would now like to turn to the issue of performance bonds and criticism of this enforcement tool. Pursuant to the Act, commercial applicants will be required to submit a “performance bond.” If the building fails to meet the LEED certification requirements, “all or part of the performance bond shall be forfeited to the District.” Experts in the area of environmental finance analysis and DDOE’s research on the subject support this approach as an appropriate and sufficient enforcement mechanism to ensure compliance with the Act.

One of the concerns that has been raised is that “performance bonds” do not currently exist in the financial assurance world. There are, however, a number of laws and regulations that have required forms of financial assurance that at the time of the inception did not exist in the market. In each regulatory context, private financial markets have developed to provide the insurance, bonds, and other financial instruments necessary to demonstrate assurance. For example, before there were automobiles, there was no such thing as car insurance. When the law recognized a growing need to insure against harms that may be perpetrated by automobile drivers to others, the market rose to the demand.

The breadth of operations and environmental risks covered by current rules is an additional testament to the market’s ability to conform to and rise to the demand of a new form of financial assurance. For example, the Resource Conservation and Recovery Act (RCRA) requires that financial assurance be provided by the responsible party as proof that adequate funds will be available when needed to undertake the necessary corrective action at a RCRA treatment, storage, and disposal facility. Many states have their own laws requiring financial assurance, including our own DDOE requirement that developers post a bond equal to the cost of stormwater management infrastructure until DDOE verifies proper installation.

A second concern that has been raised is that it may prove difficult and financially burdensome for developers to provide letters of credit, collateral to obtain a bond, or escrow in amounts up to $3,000,000 (the maximum requirement under the Green Building Act). While opposition to new financial assurance rules is common regardless of industry, DDOE believes fears of business disruption from this new assurance requirement are unwarranted. When the District began to require condominium developers to place 10 percent of the cost of construction in an escrow account or provide a letter of credit under the Condominium Act, the same concerns were cited, and yet, this is now common practice.

An additional criticism of the current “performance bond” requirement is that the enforcement mechanism creates an inherent conflict of interest because those that would require forfeiture of the bonds would also directly benefit from the forfeiture. If forfeited, performance bond funds are to be “deposited in the Green Building Fund.” Under the Act, the Green Building Fund is to be used, in part, for “staffing and operating costs to provide technical assistance, plan review, and inspections and monitoring of green buildings.” On the contrary, it is important to note that many legally-required fees, fines, and penalties are used by governments to fund the operation of the program under which they are collected. For example, D.C. Official Code § 7-632 authorizes the establishment of a Regulatory Enforcement Fund to be used by DDOE to finance its regulatory practice. The Council has routinely authorized use of enforcement proceeds to finance future enforcement actions.

In summary, we believe the bond requirement under the Green Building Act is viable and can be implemented. We have already, and will continue to, participate in discussions with our sister agencies and stakeholders as to how this enforcement mechanism should best be implemented.

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Do you think Mr. Hawkins is right?  Will the financial sector come up with a green building performance bond?

Arlington County Revises Green Building Density Program

[Today we are interviewing Joan Kelsch, an environmental planner for the Arlington County Government.  I first met Joan when she agreed to sit down with me and discuss the Arlington County green building bonus density program.  I really appreciate the green building incentive program put in place by Arlington County.  To learn about changes to the program, read on!]

Chris:  I know you have been working hard on revisions to Arlington County's green building policies.  What changes were made?

Joan:  Arlington has had a green building density incentive policy for nearly 10 years.  It was originally adopted in 1999 and we updated it in 2003.  There have been many changes in the green building arena over these past 5 years and we updated our policy to reflect the increase in knowledge and market demand for green buildings.  We wanted to provide a stronger incentive to achieve the higher levels of LEED (gold and platinum).  We reduced the bonus for LEED Certified and Silver since these levels are more frequently achieved in the DC region, even without an incentive.  The basic bonus density incentives apply to office construction, and we added a slightly higher bonus at all LEED levels for residential projects.

Arlington’s program offers additional density based on Floor Area Ratio (FAR).  The new densities offered are as follows:  

LEED Level     

Existing Bonus

Proposed Bonus

 

Office               Residential

Certified

0.15 FAR

0.05 FAR            0.10 FAR

Silver

0.25

0.15                    0.20

Gold

0.35

0.35                    0.40

Platinum

0.35

0.45                   0.50

Chris: Why did Arlington County's revise its green building policies to increase the incentives for meeting higher LEED certification levels, like Platinum, while decreasing incentives for the lower levels of LEED certification? 

Joan:  We wanted to provide an extra incentive to achieve more sustainable buildings (as measured by higher LEED levels).  We also wanted to provide extra incentive for residential projects to achieve LEED certification.  Over the past 5 years, our data indicate that about 55% of office space agreed to achieve LEED certification in exchange for the density bonus.  During the same time period, only 25% of multifamily residential units agreed to achieve LEED certification in exchange for bonus density.  We’d like “greener” residential projects overall and we’d like to encourage office developers to really stretch to reduce environmental impact even further.

Chris:  Do you think green building certification (e.g. LEED) is the proper regulatory vehicle for encouraging green building developments?  Why?

Joan:  LEED is the most widely accepted and understood green building rating system.  Until building codes call for more energy efficient and water efficient buildings, I think LEED is a good tool to guide more environmentally responsible development.  LEED addresses issues broader than just building code – indoor air quality, materials choices, embedded energy issues, waste management, etc.  I think LEED has played a critical role in helping the market transformation toward greener materials and process and will continue to do so. 

The Washington Metropolitan Council of Governments (MWCOG) released a report in December 2007 recommending that local governments strive to achieve at least Silver LEED certification for all public buildings and that private development be encouraged to meet at least the LEED Certified standard.  Using LEED across the region levels the playing field, making it easier for developers and the construction industry to understand and meet the LEED standards whether they build in DC, suburban Maryland, or Northern Virginia.

Photo:  EPA

Related links: 

Proposed Revisions to the D.C. Green Building Act Performance Bond

I am very excited for an event taking place today:  the Public Oversight Roundtable on Green Building Practices hosted by the Council of D.C. Committee on Government Operations and the Environment. 

As you may recall, Green Building Law Update has repeatedly discussed the "performance bond" requirement of the D.C. Green Building Act .  As currently written, the D.C. Green Building Act, starting in 2012, will require a performance bond as a guarantee the private development projects will achieve LEED certification. 

Last week, I wrote that no bond, security or insurance instruments exist to guarantee LEED certification.  I have never liked pointing out problems without also providing a solution.  Today, at the Roundtable, I will be speaking about problems with the performance bond and highlighting two potential solutions:

(1) "Financial security" in the form of a fee if a project fails to achieve LEED certification; or
(2) a "D.C. Feebate" similar to Portland's feebate system

In order to crystallize these solutions, I wrote a white paper discussing this complex issue and potential solutions.  You can download "White Paper:  Revisions to Performance Bond Requirement of the D.C. Green Building Act" or read the white paper in its entirety after the jump. 

If you have any critiques or suggestions, please do not hesitate to share. 

Photo:  Echo9er

Continue Reading...

DOE Releases Weatherization and Energy Efficiency Stimulus Funding

Well, that wasn't much time to get prepared. 

The Department of Energy has released the first installment of funding for the Weatherization Assistance Program and the State Energy Program

"To jump-start job creation and weatherization work, the Department of Energy is releasing the first installment of the funding - about $780 million -- in the next few days.  The Department will release additional funding over time as states demonstrate that they are using the funding effectively and responsibly to create jobs and cut energy use."

The Weatherization Assistance Program seems fairly straightforward.  Through the program, "an average investment of up to $6,500 per home in energy efficiency upgrades and will be available for families making up to 200% of the federal poverty level - or about $44,000 a year for a family of four."  

The administration of the State Energy Program funding is a bit more murky.  According to the DOE, State Energy Program funding "will be available for rebates to consumers for home energy audits or other energy saving improvements; development of renewable energy projects for clean electricity generation and alternative fuels; promotion of Energy Star products; efficiency upgrades for state and local government buildings; and other innovative state efforts to help save families money on their energy bills."

In the coming weeks, Green Building Law Update will monitor stimulus funding at the state level.  How do individuals apply for weatherization funding?  What programs will be funded through the State Energy Program?  I hope to answer these and many more questions. 

Related Links

 

Revisions to Alexandria's Green Building Policies

One of the first real conversations I had through Green Building Law Update was with Erica Bannerman.  Erica was kind enough to ask me a loaded question about Virginia municipalities mandating green building while complying with Dillon's Rule (turns out, municipalities can't mandate green building).  I soon found out that Erica is a Senior Environmental Specialist with the City of Alexandria.  Alexandria is in the process of revising its green building policies so I thought Erica would make for a great interview.  Enjoy! 

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Chris:  What can you tell me about Alexandria's plans to revise the city's green building policies?   

 

Erica:  Green Buildings are a major component of the City’s commitment to sustainable development. The City has required that its own buildings meet high environmental standards for several years and asks private developers to look to green solutions for their buildings. Furthermore, the City’s initiatives through its Strategic Plan and Eco-City/Action PlanCharter established the broad policy foundation for a wider and stronger green building practice for the future.

 

For several years, all major development applications have been reviewed for compliance with an established checklist of environmental factors, applicants have been given information on recycling building materials, and approvals have included conditions requiring such green elements as green roofs, cisterns, and energy efficient appliances. While the checklist and guidelines are voluntary, Staff and applicants negotiate to achieve the highest number of LEED or equivalent points as possible, and the City’s efforts have resulted in a long list of recent green projects.

 

In 2008, the City’s Planning and Zoning staff with the assistance of the City’s Green Building Workgroup began developing a Green Building Policy. The proposed Green Building Policy identifies specific rating systems for nonresidential and residential development as well as the specific level of certification expected. The policy statement applies equally to public and private development and identifies projects that require a Development Site Plan (DSP) or Development Special Use Permit (DSUP) as those to which the policy applies. Smaller projects, such as a simple house addition, which do not require Planning Commission or City Council approval, will not be subject to the policy.

 

Additional highlights of the proposed policy include:

  • The policy is a strong statement of expectations by the City. It is not a mandatory regulation.
  • LEED-Silver will be the expected level of achievement for all nonresidential buildings;
  • The policy includes the possibility of phasing and room for flexibility for nonstandard buildings and uses;
  • The policy anticipates significant outreach and education and requires a partnership with the building and development community.

Chris:  How will Alexandria apportion responsibility for attaining green building certification of public projects or demonstrating energy efficiency improvements. 

Erica:  Based upon the proposed policy, certification of compliance with green building standards will be provided by independent and accredited third party professionals retained by the applicant and approved in advance by the Director of Planning and Zoning. The City will require the applicant to achieve the green standard approved in its development application within two years of issuance of a certificate of occupancy.

 

Chris:  What factors do you think will most contribute to the growth of the green building industry in the D.C. metro area? 

 

Erica: The factors that will most contribute to the growth of the industry are: (1) the pro-green Administration; (2) businesses transitioning to a carbon-constrained economy; and (3) the demand from consumers for more ecologically responsible buildings and development. The carbon-constrained economy will have the greatest impact because companies will no longer be able to externalize the negative impacts buildings have on the climate and environment.

The Green Building Unicorn

I have been working with the D.C. City Council recently on revisions to the D.C. Green Building Act of 2007.  In particular, I have been looking for an enforcement mechanism that can be used to ensure compliance with LEED certification requirements for commercial buildings.  The problem is that the current Green Building Act requires a "performance bond" to guarantee certification.  Green Building Law Update has covered the issued extensively and you can read more about it here
 
My research has led me to one conclusion:
 
A security instrument guaranteeing LEED certification is the unicorn of the green building industry. 
 
Seriously. 
 
First, and most importantly, unicorns are mythical creatures.  A security instrument that guarantees green building certification is also a mythical creature. 
 
Let me make this clear: no bond or insurance instrument has been created that guarantees green certification.  This type of security instrument does not exist.  I have discussed the issue with sureties, surety industry groups, insurance companies and insurance brokers.  None of them know of a security instrument that guarantees green building certification.
 
You know what?  Everyone would love to have a unicorn (maybe not, but bear with me).  Similarly, everyone would love for a security instrument to exist that guarantees green building certification.  This instrument could be used in the hundreds of states and localities implementing green building regulations and the innumerable residential and commercial green building contracts being signed nationwide.  Unfortunately, this instrument does not exist and is years away from being developed. 
 
So if you are drafting a green building regulation, do not include the word "bond," "security" or "insurance" as an enforcement mechanism for a green certification guarantee.  You might as well just include the word "unicorn." 

Photo:  Martyn and Debz

Getting Green from the Stimulus

As promised, below is the slideshow from last week's "Green in the Stimulus" presentation as part of Rutherfoord's Trends in Green Building seminar.  Unfortunately, I have not figured out how to synchronize audio files with a slideshow - maybe next time.

I had two goals when I created this presentation:

(1) Explain the green building provisions in the stimulus package.
(2) Convey how parties can prepare themselves now to take advanage of resulting green buiding opportunities. 

You can be the judge whether I succeeded.  The slides, by themselves, do not do the presentation justice.  If you are interested in hosting the "Green in the Stimulus" presentation for your company, please contact me at chris@greenbuildinglawupdate.com.  The presentation can be tailored to your specific state or region and industry. 

 

Nevada's Green Building Incentive Experience

[GBLU Note:  Awhile back, I had the pleasure of hearing Darren Prum speak at the William & Mary symposium, "It's Not Easy Building Green."  Darren's presentation regarding Nevada's problematic green building legislation was fascinating.  I asked Darren to write something up for Green Building Law Update on the topic.

Darren's post is very timely.  State and local governments throughout the country are currently drafting new green building regulations to take advantage of incoming stimulus funding.  The "Nevada Green Building Incentive Experience" provides a warning of what can happen when green building regulations are not drafted and implemented carefully.]

By Darren A. Prum, MBA, JD

In 2005, the Nevada Legislature passed a poorly considered green building incentive package in an effort to spur private developers in the state. The hastily written legislation in conjunction with little direction to state agencies and minimal financial analysis forced the next session of the Nevada Legislature in 2007 to rethink and modify the program because it created a financial crisis of epic proportions (developers figured out quickly that they could receive up to $3 for every $1 spent meeting the LEED requirements). 

In brief, the 2005 legislation required the state to construct 2 LEED Silver or higher structures during each 2 year budget cycle while it provided a sales tax reduction down to 2% for all materials and fitting used in construction and a 50% reduction on all property taxes for 10 years to the owners of private constructed buildings. 

While the concept had the best of intentions, the agencies charged with administrating the program drastically altered the legislative intent.  The Nevada Tax Commission was supposed to only authorize projects that broke ground before December 31, 2005; but instead, it allowed those “in existence” prior to the date to qualify.  Then, Nevada Governor Gibbons’ newly appointed Director of the Office of Energy changed the application of the LEED building standard for eligibility to evaluate a project based on an entire development rather than by each individual building.  This modification allowed casinos to permit smoking and still gain the tax break.

As a result of the legislation, LEED projects in Nevada jumped from 14 in 2005 to 97 in 2007.  As the 2007 legislative session approached, budget forecasters projected a minimum loss of $940M to state revenue over the next biennium.  Clark County (Las Vegas area) would lose 10% of its tax base and the Clark County School District would lose $700-900M over the next 10 years (which the state must still fund through other sources).  The biggest winners of the breaks included:  MGM-Mirage’s Project City Center ($80M already and  $900M over its life), Venetian’s Palazzo Tower, and Boyd Gaming’s Echelon Place (currently stalled).

In 2007, a very wild legislative session resolved the financial impact but grandfathered 6 projects under the old system.  The current incentives repealed the sales tax abatement revised the property tax incentives.  The property tax reductions no longer applied to education levies and strictly enforced compliance to the adopted LEED standard.  These changes limited the state’s exposure now to approximately $493M.

In evaluating already existing incentive programs, New York, Oregon, and Maryland preceded Nevada but utilized their state income tax code as the primary tool to further green buildings.  In an effort to avoid similar results to that of Nevada, many other jurisdictions created their own unique programs.  Virginia followed the Nevada model by allowing property tax abatements at a local level, New Mexico used the income tax credit approach, and Hawaii tried a new method by requiring a green building to receive priority processing during governmental reviews for project approvals, which should not impact the state’s revenue stream at all. 

Because Nevada does not impose an income tax, a well-developed incentive program should try to offer nonfinancial incentives first, followed by abatements in taxes that do not create lasting effects to the state’s fragile revenue stream.  Accordingly, the Nevada experience provides an example to other jurisdictions considering a green building program on how incentives may offer too generous a benefit to developers and others and may place a state in financial crisis despite the noble intentions.

Darren A. Prum is a Visiting Lecturer in Business Law and Finance at the University of Nevada, Las Vegas.  A more detailed version of Nevada’s Green Building Incentive Experience is expected to appear in an upcoming issue of William & Mary’s Environmental Law & Policy Review.  Mr. Prum has other green building related articles previously published and forthcoming in the Real Estate Law Journal.

The Stimulus: Now for the Bad Part

http://www.flickr.com/photos/27563796@N06/2736542613/Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Thank you to everyone who attended Rutherfoord's "Trends in Green Building" seminar yesterday and listened to my "Green in the Stimulus" presentation.  It was great to recognize so many faces in the crowd.  If you came up and spoke to me about speaking engagements or green building legal programs offered by my law firm, please follow up with me so we can make it happen.  For those of you who missed the event, I will post the powerpoint I presented to Green Building Law Update (hopefully with a voiceover) on Monday. 

Now for the bad part. 

The stimulus package is going to result in increased levels of green building litigation. I hope I am wrong, but I think it is inevitable. 

In my "Green in the Stimulus" presentation, I highlighted three factors that will contribute to an increase in green building litigation.  The first factor is an influx of inexperienced parties attempting to build green.  There are many state and local governments that, to date, have not been substantially involved in the green building industry.  These entities, with the help of the stimulus funding, are now going to require green building projects through regulation.  Here is an example.  These state and local governments will be required by the timelines of the law to fast track these green building developments.  Do you see the problems that can arise from this scenario?

The second factor will be the requirement that projects attain LEED certification.  The website of the General Services Administration states:

As of 2003, all new GSA building projects must be certified through the Leadership in Energy and Environmental Design (LEED) Green Building Rating System of the U.S. Green Building Council, and Silver LEED rating is encouraged. 

The GSA will not be the only entity requiring LEED certification for projects.  Who will be responsible for achieving the LEED certification?  What happens if the project fails to achieve the LEED certification?

Finally, the third factor that will result in more green building litigaiton is the emphasis on energy efficiency.  The drive to build green primarily centers around the desire to reduce building energy use.  However, it is very difficult to anticipate how a building will actually perform.  Under the LEED rating system, energy efficiency is modeled through ASHRAE.  Buried deep in a ASHRAE appendix (ASHRAE 90.1, Appendix G, Section G1.2, Note 2) is the following disclaimer:

"Neither the proposed building performance, nor the baseline building performance are predictions of actual energy consumption or costs for the proposed design after construction. Actual experience will differ from these calculations due to variations such as occupancy, weather, energy use not covered by this procedure, changes in energy rates between design of the building and occupancy, and the precision of the calculation tool."

Not every government or municipality will see or understand this caveat.  Heck, many of the entities requiring certification don't even understand the acronym for the LEED rating system.  What happens when the new green buildings don't actually reduce energy usage? 

I am not the only one concerned about these issues.  Real Life LEED initially raised factor three.  Are we wrong?  Tell me. 

Related Links:

The Stimulus: Build Relationships Now

Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

I am wrapping up my "Green in the Stimulus" presentation for tomorrow and wanted to provide more information that may benefit your company as you seek out green stimulus projects. 

As you prepare to bid federal and state projects, relationships will be key.  You will need relationships with general contractors or subcontractors to facilitate your bid.  Relationships with the government officials that are creating or letting the government projects can also be helpful.  I am convinced that in the stimulus bidding process, information is power.  Government officials can provide information about requirements and preferences for green stimulus projects. 

How do you develop relationships with these government officials?  Here is an idea. 

Like Virginia, Maryland has developed a stimulus website .  Unlike the Virginia stimulus website, Maryland does not provide information about proposed stimulus projects.  But other information on the website may prove valuable. 



The Governor's office will be providing "Workshops for Local Leaders" related to the stimulus package.  The event is free.  You do not have to register. 

If you are in Maryland and you want to learn about stimulus projects and talk to the officials in charge of these projects, why would you not go to one of these events? 

Related Links: 

The Stimulus: States Have Green Too

Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

This week, in preparation for my "Green in the Stimulus" presentation, I have been providing what I hope is interesting and useful information about the stimulus.  Today we are briefly going to review a new website in Virginia, Stimulus.Virginia.gov, which is vitally important to anyone expecting to take part in Virginia projects resulting from the stimulus. 

According to Stimulus.Virignia.gov, the "website is a forum for citizens, localities, and others to submit project proposals to be considered when federal stimulus funds become available."  In its current iteration, the most interesting aspect of the website is the "Reports" section .  This section lists projects that have been submitted to the website by municipalities and individuals.

I have skimmed this list and was amazed to see that the very first project was a school seeking LEED certification. 

Do you realize the opportunity that Stimulus.Virginia.Gov, along with FedBizOpps.gov, provide?  Through these two websites, you can inventory all of the potential projects you would want to bid on and begin preparing for these projects now.   Plenty of other states have similar stimulus websites (Ohio and Michigan, for example) so these actions aren't limited to Virginia. 

How do you prepare for these projects now?  What are the risks that have to be accounted for and what should your contracts look like?  You will have to come to my presentation on Tuesday to find out!  (Or check back on my website when I make my slideshow, and possibly the video of the presentation, available).

Related articles:

The Stimulus: "LEEDS"ing the Way?

Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Yesterday, while preparing for my "Green in the Stimulus" talk, I came across something both hilarious and frightening. 

StimulusWatch.org has provided an inventory of proposed projects that could benefit from the stimulus.  The list was prepared from a list of shovel-ready projects prepared by the U.S. Conference of Mayors .  While reviewing the list for "LEED" projects, to my great horror, I made the following discovery:



If an entity is seeking "LEEDS" certification, is the project really "shovel-ready"?  And no, that is not a rhetorical question. 

Related Links: 

"The Stimulus: Now for the hard part"

Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.
 
On February 17, CNN ran the above headline after President Obama signed the stimulus bill.  To me, a more perfect headline could not have been written. 
 
Ever since I read about the stimulus bill, one particular nuance has interested me:  the package does not include earmarks.  Due to the lack of earmarks, the hardest part of the stimulus bill may be administering the $787 billion in funds. 

The lack of earmarks has important implications for state and federal energy programs throughout the country.  Without earmarks, state energy offices will have wide-ranging discretion in doling out large sums of money not previously seen: 

The biggest test of the administration’s energy goals may come in spending the billions that have been devoted to states and cities for improving energy efficiency.  To get the money out quickly, the plans sends it through a range of programs that are not accustomed to seeing funding on this scale.  State energy offices that annually receive less than $100 million combined from Washington are slated to receive $3.4 billion.  
 
 

A recent NPR story, "Earmark-Free Stimulus Bill Lacks Spending Direction", focused on the potential problems that may arise when the money is sent to the states:   

 
When this bill passes, a Niagara Falls of money will flow out of Washington and into the accounts of state highway commissioners, governors and legislatures, local school boards, county executives -- even mayors, [the Brookings Institution's Sarah] Binder says.

"It raises a whole host of questions about how efficiently money can be spent, how effectively it will be spent, how quickly money can be spent, just because there's no set process here for determining how money will get out the door to create jobs or, as the president said, to save jobs," she says.
 

In one particular instance, a South Carolina official who runs the state’s energy efficiency programs, will be tasked with managing large sums of money and finding proper projects and programs for the money:
 
 
In South Carolina, the state energy office is so small that its director, John Clark, answers the phone.  He said his office, which receives $.15 million per year, has put out an urgent call to state offices and school districts for energy-saving projects to receive.  He will also have to advise the state’s cities and counties, which have even less experience in big energy efficiency projects and are slated to get $35 million of their own from a separate $3.5 billion block-grant program in the package.”  
 
 
While Republicans, Democrats and the President argued over the stimulus package for weeks, the real battle may arise when state agencies and officials attempt to divide up the stimulus funding and choose the projects that receive funding.  How are you planning to seize the opportunities that arise from the stimulus? 
 
I will be speaking on this and other topics surrounding the stimulus package on March 3 and you are invited to join me.  Additionally, I am putting together a "Green in the Stimulus" program that may be of interest to many readers.  Stay tuned as we continue to discuss implications for the green building industry in the stimulus package.
 
Related Links: 

The Stimulus: Green Building Provisions

Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.
 
Love it or hate it, the stimulus package was signed into law yesterday.  In the coming months and years, $787 billion is going to be used to support new projects, developments and tax cuts throughout the country.  Set aside your exhilaration, worry, excitement or anger over the stimulus package.  You should be thinking about one thing now: 
 
How are you going to take advantage of the opportunities presented through the stimulus package
 
On March 3, I will be speaking on this very issue in Arlington, Virginia.  My friends at Rutherford were kind enough to include me in their symposium:  "Trends In Green Building - Effective Strategies for Existing Buildings and the Federal Stimulus Package."  Other speakers and their topics include:
Thomas C. Mawson - U.S. Green Building Council
Executive Director, National Capital Region Chapter
2009 LEED Rating System Changes and their Impact on Property Owners and Developers

Richard M. Silberman - Healthy Buildings International, Inc.
Chief Executive Officer
Earning the Ventilation-Related Credits Within LEED-NC

Eric M. Oliver - EMO Energy Solutions
President
Looking for Energy Savings In All The Right Places

Bobby C. Christian - Tangible Software Solutions, Inc.
President  
Simplifying Energy – Buy. Use. Manage.
I am very excited to hear the other speakers talk about energy efficiency in both new construction and retrofits.  This is a very timely panel and one you should not miss.  If you would like to attend, please RSVP to me (chris@greenbuildinglawupdate.com) or Nancy Shipley (703-813-6575 or nancy.shipley@rutherfoord.com). 
 
Over the next few weeks, I am going to focus on the stimulus package and hope to develop my presentation before your very eyes here at Green Building Law Update. 
 
Let's start with the basics today.  The following is a list of funding for green building projects included in the stimulus package, according to the Associated Press:
  • About $50 billion for energy programs, focused chiefly on efficiency and renewable energy, including $5 billion to weatherize modest-income homes; $6.4 billion to clean up nuclear weapons production sites; $11 billion toward a so-called "smart electricity grid" to reduce waste; $6 billion to subsidize loans for renewable energy projects; $6.3 billion in state energy efficiency and clean energy grants; and $4.5 billion make federal buildings more energy efficient; $2 billion in grants for advanced batteries for electric vehicles.
  • $4 billion to repair and make more energy efficient public housing projects
  • $44.5 billion in aid to local school districts to prevent layoffs and cutbacks, with flexibility to use the funds for school modernization and repair
That last entry caused me to do a double take.  Money set aside for education was previously touted as funds to modernize schools.  The final version appears to have modified the language to allow the funds to be used for teachers and administrators. 
 

Did I forget anything? 

Related Links:

Thank You Mr. Fedrizzi

To start this post, I want to thank Rick Fedrizzi , CEO of the United States Green Building Council.  On February 12, I attended a breakfast hosted by Bisnow at which Mr. Fedrizzi was the guest speaker.  I really appreciated his speech - he did not ignore the current economic climate but talked about the opportunities that will emerge from the green building industry.  
 
Even more important, at least for me, was the positive tone of his presentation.  Right after attending the breakfast, I was scheduled to speak to members of the Metropolitan Washington Council of Governments regarding suretyship.  You can see the slideshow presentation I used below.  After I left Mr. Fedrizzi's presentation, I thought about how I wanted to sound as positive as he did about the green building industry.  
 
Instead of focusing on problematic language in the D.C. Green Building Act surrounding the use of the word "performance bond" (a type of surety bond), I instead tried to emphasize how the Act could be corrected. 
 
Guess what?  It worked.  One of the members thanked me for providing a positive presentation instead of harping on the problematic language.  Another member told me that I had made learning about suretyship fun (or at least bearable). 
 
So Mr. Fedrizzi, thank you. 
 
But wait, there is a post-script for all of the Green Building Law Update readers.  You all have the opportunity to help draft new language for the D.C. Green Building Act.  I am seeking input on what enforcement mechanism should be used instead of a "performance bond."  I have ideas, but I want to hear what you think. 
 
What do you think?  Here are some resources to get started:
 My presentation: 

Why Build Green in Virginia? It Just Makes Sense

[Green Building Law Update is achieving another first:  our first guest post!  Christopher G. Hill is a Virginia construction attorney and recently started a legal blog, Construction Law Musings.  I first met Chris through Twitter and I appreciate his willingness to discuss green building legal issues.]

By:  Christopher G. Hill
 
Lately terms such as LEED (Leadership in Energy and Environmental Design) and Green Building have been thrown about in the press, by politicians, and by local zoning and building officials in Virginia. 
 
Nationally, the Obama administration has shown support for green building.  Locally, the Richmond City Counsel recently passed Resolution 2008 R 152 that will require all new city buildings to meet the LEED Silver Rating (defined by the U. S. Green Building Council (“USGBC”)) by 2010.  Tim Kaine, the Governor of Virginia, issued Executive Order 48 indicating his support for green building and the LEED standards and has recently shown support for the use of green related job creation in the face of the recent recession.  Other localities, notably Arlington, Virginia, have passed building code standards or zoning ordinances requiring green certification.  In short, green building is here to stay.

 

Aside from the governmental impetus to learn green building techniques, two factors require that Virginia contractors learn to build green.  These two factors are simply 1.  project owners want green buildings and 2.  those contractors that do not keep up with the “greening” of construction are likely to fall behind and struggle to stay afloat in today’s economy.

 

Project owners want green buildings for many reasons.  Owners want to be seen as environmentally friendly and civic minded.  Additionally, and possibly more importantly, owners save money (both initially and over time) by building green.  As an example, use of integrated green building methods requires less up front costs for irrigation piping and the like and leads to use of less than one quarter of the water that a non-green building uses according to a recent study.  Lower water usage means lower operating costs.  Couple these factors with tax incentives and the like provided by the government and the benefits of green building to owners are obvious.

 

Because of the environmental benefits and cost savings inherent in a green building approach, contractors versed in green building can sell their services more readily than those that do not.  First of all, a “green” contractor will be among a limited set of contractors to whom an owner seeking green certification for its building will look.  Second of all, if an owner asks you for input, you can sell him or her on the benefits of your services over a comparable non-“green” contractor.  In both of these instances, being knowledgeable in green construction and its benefits will serve your business well.

 

As always, be sure to consult with a legal professional regarding the contract requirements on such a project before bidding on the job to avoid headaches at the end of the project.  As with any new area of business, you are better off anticipating issues rather than responding to them.   


 

How to Regulate Green in Virginia

Last week, we discussed a law in Virginia that prohibits municipalities from creating green building codes or mandates.  In short, Dillon's Rule only grants to municipalities those powers that are explicitly granted by the state.  The Virginia Code has specifically granted the power to create a building code to the state; municipalities, on the other hand, can create zoning ordinances
 
Recently, I had the pleasure of sitting down to speak with Joan Kelsch, Environmental Planner for Arlington County, about the Arlington County green building programs.  Arlington County has taken advantage of the opportunity to create zoning ordinances by promulgating two programs that stimulate the development of green building projects:  (1) a Site Plan Program; and (2) a Bonus Density Program. 

Lets start with the Site Plan Program.  According to Kelsch, in Arlington County "green building policies are technically voluntary but site plan projects do allow Arlington County to ask for specific proffers from developers."

What is a site plan project?  A site plan is a large project that requires a special exception to the zoning ordinance in order to be built.  Because site plans require an exception to the zoning ordinance, Arlington County is able to require specific green building requirements, including:

(a) LEED™ Accredited Professional
(b) LEED™ Scorecard.
(c) LEED™ Tracking.
(d) Construction Waste Management.
(e) Energy Star Appliances.

In addition, Arlington County is also incentivizing green building development through its Bonus Density Program.  Under the Bonus Density Program, projects larger than zoning would normally permit are allowed if the developer promises to achieve a specific LEED certification level. 

We will be looking at Arlington County's Bonus Density Program in more detail, in part, because the enforcement mechanism involves a four-letter word that has created problems in Washington, D.C. (hint: bond).

Related Links: 

Top 5 Things I Learned at Green Building Law Symposium

Last week, I had the pleasure of speaking at the William and Mary Environmental Law & Policy Review symposium "It's Not Easy Building Green."  The students did a fantastic job and the audience was large and engaged. 

In particular, Mark Pike organized an interactive web 2.0 experience for the symposium that was quite impressive.  Many of the symposium participants used Twitter to discuss the event.  Additionally, Mark set up a blog (in less than 12 hours!) and live blogged each of the presentations.  From what I have heard, the event was even taped and should be made publicly available. 

In addition to the technology, there was plenty of substantive discussion about green building law.  Here are five things I learned at the symposium:

1.  Stephen Del Percio correctly pointed out that state legislation may run afoul of antitrust law if it only incorporates one green building rating system, like LEED.

2.  North Carolina's green building regulations focus on two specific green building strategies -- energy efficiency and water usage -- instead of requiring certification through a rating system.  This seems like a good idea to me. 

3.  If I am going to describe techniques to reduce water usage, I should be able to list more than just "low flow urinals."  Furthermore, I should not emphasize the awkwardness by repeating the word "urinal" and then pausing.  Thanks to everyone for pointing this out to me.

4.  Darren Prum described a ridiculous scenario in Nevada surrounding a property tax abatement that went awry.  Essentially, the property tax abatement that was provided to projects achieving LEED certification almost bankrupted the state. 

5.  There is a Property Tax Reduction regulation in Virginia for projects that achieve LEED certification or certification under another energy preferred standard.  You will definitely be hearing more about this at Green Building Law Update. 

Green Building Law Update will be looking at these issues in more depth in future posts.  Thanks to all of the symposium participants for their hard work and important ideas.

Related Links: 

Green Building Regulation in Virginia: Zoning In

I hope you survived the dramatic cliffhanger from Monday.  Now, time to answer the question, how do Virginia cities and counties regulate green building if they cannot adopt a building code? 

Such a dramatic pause for such a mundane answer:  zoning ordinances. 

The Virginia code specifically delegates to the municipalities the right to create zoning ordinances:

“The planning commission of each locality may, and at the direction of the governing body shall, prepare a proposed zoning ordinance including . . . a text setting forth the regulations applying in each district.”

Under the Dillon Rule, the state creates the building code at the state level but cities and counties can create zoning ordinances at the local level. 
Local governments have recognized the opportunity to regulate green building through zoning ordinances.  You may remember this great quote from a previous post:

“Arlington County is deliberately pushing the limits of state law to insist on green standards for development. . . . Arlington pioneered green building standards through its planning and zoning . . . process.”

Next week, we will examine Arlington County's green building regulations.  In the meantime, I have something very special for Friday.

Related links: 

Virginia Green Building Regulations: Avoid the Building Code

This past weekend, I spent a lot of time preparing a slideshow for the William & Mary Environmental Law & Policy Review Symposium, "It's Not Easy Being Green."  As you may recall, I will be presenting on green building regulations in Virginia.  Guess what we are going to discuss on Green Building Law Update this week?  That's right, green building regulations in Virginia. 

Hold on, stay with me. Virginia is actually a very interesting state for developing green building regulations. 

As you may recall, in the past, a reader asked how a Virginia city or county can regulate green building with the Dillon Rule in place.  The Dillon Rule essentially says this
"Municipal corporations have only those powers that are expressly granted . . . ." 
One power that is expressly not granted to municipal corporations (cities and counties) is the right to craft a building code:
“The Board is hereby directed and empowered to adopt and promulgate a Uniform Statewide Building Code. Such building code shall supersede the building codes and regulations of the counties [and] municipalities . . . .”
It is clear that Virginia cities and counties cannot require green building through a building code.  Such a building code would have to come from the state legislature.  But there are instances of Virginia cities creating green building regulations.  How do they do it?  I will explain on Wednesday. 

Related links:

Green Building Law Update Gets Interviewed

Today, we bring you a first on Green Building Law Update:  my first radio interview

Vik Duggal, over at Konstructr, was kind enough to invite me to be a guest on his KCast interview series.  Konstructr is basically Facebook for the construction industry. 

Some of the topics we discuss include green building attorneys, President Obama's proposed economic recovery package, Twitter and Washington D.C.'s Green Building Act. 

There is one correction I need to make from the interview.  Despite what Vik says, I do not have a "LEED AP" tattoo (or any tattoo for that matter).  Enjoy and please send me your suggestions for future radio interviews! 
 

How Should Cities Legislate Green?

Back in October of 2008, in the midst of the economic turmoil, Green Building Law Update wrote that governments should reconsider requiring green building certification for projects.  With the deepening economic recession, some governments are now supporting green building projects while specifically not requiring certification. 

A recent New York Times article highlighted green building developments in Westchester County.  Interestingly, one city is not requiring LEED certification due to the additional costs while another is pushing forward a code requiring LEED certification: 

Building green in the county does not always mean building to LEED certification standards. Some local governments, like New Rochelle’s and the county Department of Public Works, have committed to green building in principle but are not going for LEED sign-off because of extra costs of hiring consultants and paying certification fees.

“We are requiring all of our staff and consultants to provide us with a listing of options for the different levels of certification, and then we are analyzing the costs,” said Ralph L. Butler, commissioner of public works for the county . . . .

Reese Berman, the supervisor of the Town of North Castle . . . is working on green guidance for local governments.

“It’s hard when development is slow for towns to make this kind of legislation,” said Ms. Berman, whose town has had to shelve plans for a new highway garage with solar panels. “Unless there are really big incentives from the state or federal government, we are not going to see the kind of green initiatives we were hoping to see.”

The article also highlights Yonkers, New York, which has "drafted the most aggressive green building standards in Westchester."  In the coming months, the Yonkers City Council is expected to pass a green building code that will require most new construction comply with LEED standards.  

On January 30 and 31, I will be sitting on a green building law panel to discuss government green building regulations.  Which city do you think is crafting more appropriate green building regulation: New Rochelle, which is pushing green building projects without the certification or Yonkers, which is pushing a green building code requiring certification? 

Related Links:

D.C. Council Delivers Present to Surety Industry

Here at Green Building Law Update, sometimes we wonder if we are just talking to our parents and significant other.  Then we get a comment or a great email from one of our readers and we realize someone is actually paying attention.  With that said, what happened this past week in the green building industry astounded and amazed Green Building Law Update.  

Earlier in the week, your humble author presented a seminar “Green Building Law from a Surety’s Perspective” to a client.  Just prior to the seminar, an article was published in the Washington Business Journal that highlighted the D.C. Green Building Act of 2006 performance bond requirement.  The first few paragraphs were sent to me but I didn’t have time to review the full article before the presentation. 

You may recall that this performance bond requirement drew the ire of the Surety and Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers (NASBP) and Green Building Law Update.  When I first read the performance bond requirement, I literally gasped out loud and realized the green building industry may have some serious legal problems in the very near future.  Basically, the D.C. Council was demanding an insurance instrument that didn’t exist.

During the presentation to the surety client this past week, I highlighted the D.C. Green Building Act performance bond requirement as an enforcement regulation that was going to cause the surety industry problems.  After the presentation, I returned to my office and attempted to unbury myself from hundreds of emails.  With time on my hands, I opened the full version of the Washington Business Journal article and, once again, gasped out loud when I read the following paragraph:

Both trade groups, as well as the Surety and Fidelity Association of America, have met with D.C. officials to air their concerns, one of the first challenges to legislation that is among the first of its kind nationwide.

Alan Heymann, a spokesman for the D.C. Department of the Environment, said his agency has formed a working group with the Department of Consumer and Regulatory Affairs to address the surety industry’s concerns. Both agencies are tasked with implementing parts of the act.

Green Building Law Update is not taking credit for the D.C. Council’s reconsideration of the green building performance bond requirement.  But after writing numerous articles, posts and having discussions with the D.C. Council, I would like to think I played some small part in effecting change. 

Congratulations to the D.C. Council for taking steps to remedy what could have been a problematic regulation.  Congratulations to the SFAA and NASBP for pointing out this problematic provision.  Congratulations to the green building attorneys writing about these issues and helping the green building industry avoid legal problems. 

Of course, there are going to be more green building legal problems.  Green Building Law Update is excited about discussing these issues in 2009 and, hopefully, effecting more change.  

Related Links: 

Green Regulation Not Set in Stone

Green Building Law Update came across an interesting lawsuit in Texas challenging a green cement regulation.  First, here's a little background on green cement regulations
Green cement resolutions put pressure on wet kiln operators to either update their smog-causing pollution controls to the level of dry kilns, or replace their wet kilns with new dry ones. They do this by incorporating state emissions standards as specs in bids for cement purchasing. These specs favor more aggressive pollution controls.
 
 
The cities of Dallas, Ft. Worth, Arlington and Plano had apparently adopted similar green cement resolutions.  In November 2008, Ash Grove Cement filed a suit challenging these resolutions: 
Late in the afternoon on the day before Thanksgiving, lawyers for Kansas City-based Ash Grove Cement filed suit in federal court against the cities of Dallas, Ft. Worth, Arlington, Plano, The Dallas County School District and Tarrant County for adopting “green cement” resolutions that favor modern, less polluting dry kilns over older, dirtier wet kilns - like the three the company operates at its 43-year-old Midlothian plant, south of Dallas.

 
According to a Kansas City Star article, Ash Grove Cement alleges that the green cement resolutions violate Texas law because municipal bodies are required to evaluate only the competence of the bidder and the quality and price products or services.  The suit also contends that the resolutions violate Ash Grove Cement’s constitutional rights.
“This is not a case about air quality; rather, it is about whether the defendants, however well intentioned but misguided their goals might be, may ignore laws they do not wish to follow, may pass resolutions which are unfair, unwise and unlawful, and may take property away from Ash Grove in an arbitrary and capricious manner,” Ash Grove’s complaint states.

 

As more "green" regulations are passed at the federal, state and municipal level, challenges to these regulations by affected companies will become more common.  The outcome of these lawsuits will either kill "green" regulations or force companies to comply.  Needless to say, there is a lot at stake and Green Building Law Update will continue to keep you apprised of the outcome. 

Related Links: 

 Credit:  Thanks to Rich Cartlidge for originally sending me this story. 

A Tale of Two Cities: Los Angeles' Audits

Continuing our discussion of topics from Greenbuild, we now move to Los Angeles’ green building regulation.  We have already highlighted Portland’s innovative Feebate enforcement mechanism.  Los Angeles has created a very different enforcement mechanism that, frankly, may cause problems. 

Under Los Angeles’ Green Building Program Standard of Sustainability, projects meeting certain size requirements must:  (1) include a LEED AP on the project and (2) demonstrate that the project has met the intent of the USGBC’s LEED certified level.  Importantly, Los Angeles’ Standard of Sustainability states that “formal certification by the USGBC is not required.” 

 

Los Angeles’ plan to enforce the Standard differs significantly from other regulatory schemes and includes the following steps:

  1. Developers must submit plans and a preliminary LEED checklist to the Department of Building and Safety (DBS);
  2. DBS will then refer an applicant that meets the sustainability requirements to the Department of City Planning for clearance; and
  3. Every seventh project is then audited to ensure compliance with LEED certification.

The Standard never states the punishment if a project fails an audit.  Absent a sufficiently punitive fine for failed audits, owners may be willing to gamble that they will not be audited.  Furthermore, the Standard does not include any provision to ensure that green building strategies are incorporated into actual construction.  Owners can simply eliminate green building strategies after the design phase and avoid punishment. 

 

Which system do you prefer, Portland’s Feebate or Los Angeles’ Audits? 

 

Related Links: 

A Tale of Two Cities: Portland's Feebate

 Continuing our posts from GreenBuild, our next two posts will discuss two very different green building regulatory enforcement mechanisms from two very different cities.  The first city, Portland, has created a very innovative enforcement mechanism to enforce its stringent green building regulations. 

Portland is very similar to other cities in that they will require specific project to achieve varying LEED certification levels.  Portland's enforcement mechanism, however, is much different.  Called a "Feebate," 
Portland will require that some projects pay into a green building fund while other projects obtain rebates from the city.

Under the Feebate system, all new buildings built to code are assessed a fee.  If a project is built to LEED Silver, then the fee is waived and the owner obtains access to financing options.  Even better, if a project attains LEED Gold, the city writes the project owner a check! 

All money that is paid into the green building fund is used either for the incentives or to educate about green building.

Pretty neat, don't you think?  After the Holidays, Portland is coming out with its economic analysis of the plan, and I am looking forward to reviewing it with you. 

Photo Credit:  Scott_rtw

USGBC Supports Proposed Green Code

Here at Green Building Law Update, we remain troubled by the disbanding of the proposed ASHRAE 189.1 green building code committee, but we have to point out one bright spot. 

As you may recall, last week we  discussed the merits of the “Proposed Standard 189: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings" and the disbanding of a committee that was to create the code, apparently due to pressures from industry groups.   After the committe was dissolved,  the USGBC voiced strong support for the green buiding code: 

Brendan Owens, vice president for LEED Technical Development at USGBC, told EBN that it was “very surprised at this action taken by ASHRAE,” adding that USGBC is trying to learn more about ASHRAE’s reasons.
 
“We want to make sure that this is the best path forward,” Owens said. Acknowledging the uncertainty about Standard 189, Owens noted that a minimum green building standard that can be incorporated into codes is “so fundamental to everything USGBC is about, we are very committed to making sure it happens.”
In previous posts, we have discussed the problems with governments requiring LEED certification through regulation.  Apparently, the USGBC also recognizes these problems.  By strongly supporting the proposed green building code, the USGBC seems to recognize that governments should be mandating green building strategies through construction codes.  

Do you think governments should require green building certification or compliance with green building codes?  Or both? 
 
Related Links: 

 

Industries Halt Proposed Green Code

Last week, Green Building Law Update questioned whether governments should be requiring LEED certification through regulations and mandates.  Assuming governments should get out of the green building certification business, what then should governments do to support green construction strategies?  There are generally two options, one of which we will discuss today:  green building codes. 

Green building codes essentially incorporate green building strategies into construction codes.  By incorporating green building strategies into code, governments can not only mandate the strategies they deem most important but also avoid the costly and time-consuming certification process. 

Apparently, not everyone agrees with me.  Shari Shapiro first brought my attention to the fact that the committee constituting the “Proposed Standard 189: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings” recently disbanded.  Proposed Standard 189-P was supposed to serve as a minimum green building code. 

A committee composed of members from ASHRAE, the USGBC and the Illuminating Engineering Society of North America (IES) had been put together in 2006 to work on the standard.  But on October 14, 2008, the committee was suddenly disbanded and the reasons remain unclear:   

Several committee members discussed the move with EBN, all of them speaking off the record, either because they were unauthorized to speak by the organizations they work for, or did not want to jeopardize their chances to rejoin the committee.

Discussing resistance from various industry groups, including steel, gas and utilities, wood, and building owner interests, one committee member said, “We must have been doing a good job.” While those trade associations had specific complaints in some cases, in others they were unsupportive of ASHRAE’s involvement, as a mechanical engineering association, in a broad green building standard.

There are many nuances to creating a green building code, which we will discuss in future posts.  Managing all of the associated parties' interests is one clear impediment to proposed green building codes. 

Related Links: 

A Week of Epiphanies: I Don't Mean to Diminish This But. . .

In continuing our week of epiphanies, here’s another one that struck us here at Green Building Law Update:  should governments consider getting out of the green building certification process? 

Yes, I realize this epiphany is out there and that practically every state has implemented some sort of green building regulation.  Over the past few months, we have profiled green building regulations in D.C., Virginia, Indiana and Maryland, to name a few.  But the more I think about these regulations, the more I become concerned that governments should not mandate certification, particularly of public projects.

Apparently, I am not the only one with these concerns.  For example, this article cites an Evanston, Illinois official that is concerned with certification cost:

At the meeting, Evanston residents spoke about the Green Building Ordinance, which was drafted by the Evanston Environment Board. . . .  Ald. Lionel Jean-Baptiste (2nd) cited the need to look closer at the cost of the ordinance.

"It's difficult in this current economic climate for anyone to build," he said. "We need to look more into the cost, and have greater discussion at the committee level." 

And here is another example, this time a LaCrosse, Wisconsin official voicing concern over the costs for green building certification:

“When I think about all this discussion about certification and not certification, I think we’re going to do all this good stuff so let’s just declare it a green building and go home,” Supervisor John Medinger said during the Law Enforcement Center Construction Committee meeting this week. “We say it’s a green building. Who says it isn’t? I don’t mean to diminish this, but I’m trying to see what we’re going to get with this $161,000.”

With the state facing a $3 billion shortfall, Medinger said the county will take a hit and can’t afford to spend money that brings no return.

These officials represent a minority view that government’s should not mandate green building certification due to the associated costs.  But Mr. Medinger drives home the point:  what are governments getting out of certification? 

Green building certification is primarily a marketing tool used to sell a building.  Green building strategies can most definitely be incorporated without obtaining certification and the results can still be confirmed through commissioning.  What benefits are cities and states getting when their public buildings are deemed certified?

Related links: 

A Week Of Epiphanies: My Own Backyard

Tyson's Rendering Over the weekend, we here at Green Building Law Update had some green building epiphanies.  So let’s start with epiphany number one.  As I was driving into my law firm’s office in Tyson’s Corner on Saturday, I looked out at the construction and thought to myself, why am I not writing about that? 

This isn’t any regular construction I am referring to either.  The construction I see everyday is the beginning stages of the Tyson’s Land Use Task Force Recommendations.  While I have been perusing the Internet for green building stories, there is a green building story happening in my backyard! 

The first time I read about the Tyson’s Corner redevelopment project was in this post  from Kaid Benfield’s NRDC blog.  Kaid describes the current design of Tyson’s Corner:

an absolute mess of a place that would be hard-pressed to function worse environmentally or even as a place to navigate in a car.  You'd have to be suicidal to try it on foot. 

Kaid is right – I have worked in Tyson’s for three years and walked to lunch once.  Thankfully, the Tyson’s Land Use Task Force Recommendations are aiming to fix these problems by focusing on “smart growth.”  Smart growth generally is an urban planning and transportation theory that concentrates growth in the center of a city to avoid urban sprawl.  

Maybe you are wondering, what does this have to do with green building?  Next time we discuss the Tyson’s Corner redevelopment, we will look at the Task Force Recommendations, which include green building regulations.  

Related Links

Pushing the Limits of Green Building Regulations

Last week, Green Building Law Update wrote about the Dillon Rule and how it is thwarting Virginia cities’ green building regulations. Under the Dillon Rule, the Virginia legislature is empowered with passing building codes, thus preempting city building codes or building regulations.

As we detailed, Indiana also follows the Dillon Rule but was successful in passing a green building regulation. The regulation was actually an executive order passed by Governor Mitch Daniels requiring new state buildings to achieve green building certification. You may remember that Governor Tim Kaine passed a similar executive order in 2007 requiring the incorporation of green building strategies in public construction. So how are Virginia cities including green building regulations?

  • Alexandria, Virginia has set a goal “to achieve LEED-Silver rating for all new City-owned facilities over 5,000 square feet.”

  • Arlington County “encourages private developers to evaluate the environmental impacts of all site plan projects.”

Importantly, notice the language in these green building provisions. Virginia cities have recognized that green building regulations affecting private projects must be passed in the Virginia State Legislature and so they either set “goals” or “encourage” green building. But this doesn’t mean the Virginia cities aren’t testing the limits of the Dillon Rule:
 

Arlington County is deliberately pushing the limits of state law to insist on green standards for development. A decade ago, Arlington pioneered green building standards through its planning and zoning approval process.
 

Arlington County has created one of Green Building Law Update’s favorite green building incentive structures. Stay tuned to read more about it.

Related Articles: 

Anyone Using Energy Star Benchmarking?

To finish off the week at Green Building Law Update, we are going to attempt to answer another reader question with the help of all the readers out there. In a previous post, Anna MacLeod posted the following question: 

I need to find some DC-based architect, commercial building development companies, etc… Anyone who would be affected by the requirement described in the article below.

 

"Washington, D.C., was among the early cities to require privately owned buildings to meet LEED standards. Now, it is requiring the city government as well as private building owners to benchmark their buildings using the Energy Star Portfolio Manager tool and to submit performance data to the City, which will then publish it for the public.'

           

If anyone can help me by sending me any contacts or websites it would mean a lot to me.

 

I am glad Anna asked about this issue because I have been meaning to post on this topic. Back on July 15, 2008, the D.C. City Council unanimously passed The Clean and Affordable Energy Act of 2008.  Among the provisions in the Act is a requirement for Energy Star benchmarking:

 

Beginning in 2010, it would require commercial property owners to generate an Energy Star efficiency "score" for their buildings using free online tools provided by the Energy Star program. That score would be made available to the public by the District Department of the Environment (DDOE).

 

You may be asking yourself, what is the point of this benchmarking program? According to Cliff Majersik, the program director for the Institute for Market Transformation, the benchmarking program will create “a market-based demand for energy disclosure.” If the D.C. Government’s plan works, there will be increased demand for green buildings. In short, you might want to think twice about developing a non-green building in the District of Columbia. 

 

So can anyone out there help out Anna? If you are currently using the Energy Star benchmarking tool or The Clean and Affordable Energy Act of 2008 will affect you, please drop a note in the comment section below with more details and contact info for Anna. Thanks!  

 

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Dillon Rule Hampers Green Building Efforts

Now that our discussion of Southern Builders v. Shaw Development is over (whew!), Green Building Law Update is going to take the rest of the week to answer some reader questions.  The first question comes from Erica: 

How should a locality located in a "Dillon Rule" state, such as Virginia, go about establishing a mandatory green building program?

Good question Erica.  Lets get everyone on the same page first.  What exactly is the Dillon Rule?  The Dillon Rule is a peculiar rule that basically limits a city’s rulemaking ability so that the city can only make rules when expressly granted by the state

“This rule provides that municipal corporations have only those powers that are expressly granted, those necessarily or fairly implied from expressly granted powers, and those that are essential and indispensable. When a local ordinance exceeds the scope of this authority, the ordinance is invalid."

The Dillon Rule is upheld in Virginia, which means that cities are not allowed to create their own building codes.  Virginia Code section 36-98 states “the Board is hereby directed and empowered to adopt and promulgate a Uniform Statewide Building Code. Such building code shall supersede the building codes and regulations of the counties, municipalities and other political subdivisions and state agencies.”

What does this have to do with green building?  We have previously highlighted the Virginia legislature’s disagreement over green building regulation.  While the Virginia legislature continues to disagree as to the proper green building rating system, Virginia cities are watching cities all around them pass green building regulations.  

So how does a Virginia city get around the Dillon Rule so it can enact green building regulations?  My first instinct was building codes, but clearly that is not an option.  What other states use the Dillon Rule.  Indiana?  Indiana!  And Indiana recently imposed green building regulations!  How did that happen?  Stay tuned…

Related Links

D.C. Forges Ahead with Green Bond Requirement

GBLU has previously mentioned that September is going to be a big month for green building regulations and the green building performance bond in Washington, D.C.  So far, we have highlighted D.C.’s Green Building Act performance bond requirement and the surety industry’s response. It now appears the Government of D.C. is forging ahead with the green building performance bond requirement. 

On April 25, 2008, D.C.’s Department of Consumer and Regulatory Affairs (DCRA) included new building codes in a proposed rule.  DCRA has since completed the rule making process and on June 26 submitted the Construction Code Supplement of 2008 to the full D.C. Council.  The Construction Code Supplement includes the following rules to enforce the Green Building Act’s green building performance bond requirement. 

 

1301.2.3 Prior to Preliminary Review, the applicant shall file any

documentation required . . . and post a performance bond (or letter of credit or escrow

account) pursuant to Section 6 of the Green Building Act, D.C. Official Code

§6-1451.05.

 

1301.2.4. Upon or before construction completion, the permit holder (whose

permit has been obtained pursuant to the Expedited Green Building Permit

Process) must apply to the Certifying Entity for “certification” of its 

compliance with the Green Building Act.

 

1301.2.5 If green building verification is not obtained in accordance with

the requirements of D.C. Official Code § 6-1451.05, all or part of the

performance bond shall be forfeited as provided in D.C. Official Code § 6-1451.05(g) and (h).

 

The Government of D.C. remains very serious about incorporating a green building performance bond requirement that guarantees compliance with the Green Building Act.  The City Council is set to vote on the green building codes in September 2008. The final vote will have a significant impact on the surety industry’s bonding of D.C. projects. 

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Green Bond Coming to a City Near You...

In a previous post, GBLU referenced problems with a green building performance bond requirement in Washington D.C.’s Green Building Act.  So what are the apparent problems with this green performance bond? 

On August 13, 2007,  the Surety and Fidelity Association of America and the National Association of Surety Bond Producers detailed the problems with the bond requirement, pointing out that the Act “includes bond requirements that, if not clarified significantly, may make sureties reticent to issue such bonds.”  The SFAA and NASBP outlined several perceived problems with the Green Building Act’s performance bond requirement, including:

•    The Act incorrectly uses the term “performance bond” as the bond described in the Act “seems to function more in the manner of a license or compliance bond, which typically guarantees compliance with a law or code.” A performance bond typically assures one party that another party will perform the contract in accordance with its terms and conditions.

•    The Act does not designate which party is to furnish the performance bond.  The letter argues that “the building owner or developer, as the originator of the building project that retains the design professional and contractor, hold the ultimate responsibility for whether the building achieves compliance with the Act’s requirements.” 

The SFAA and NASBP’s primary concern with the Act is that contractors and performance bonds are improperly suited for guaranteeing green building compliance.  The Government of D.C. so far has continued to incorporate the green performance bond in building codes and rules used to enforce the Green Building Act.  September 2008 is going to be a big month in D.C. for green building codes and the green performance bond.  GBLU will continue to keep you apprised.

D.C. Provides Green Roof Subsidy

As part of GBLU’s monitoring of green building regulations and codes, GBLU will provide timely information regarding government green building programs that may be of interest to you.  Below is information about a Green Roof subsidy being offered by the Government of the District of Columbia, District Department of the Environment.  Please note, applications are due September 9th. 
   
D.C. plans to make major changes to the stormwater regulations in the near future that will encourage incorporation of green roof technology.  Subsidies such as this one are a good step to promote green roofs in advance of these stormwater regulation changes, which we will discuss in a later post.  Thanks to Scott Kowalski and Brian Cashmere for providing information regarding this subsidy. 


Green Roof Subsidy Grant Program 2008
Contact Info: Office 202-518-6195
email: nora@dcgreenworks.org

DDOE District Department of the Environment

The Green Roof Grant Program applies to:
• Extensive or intensive green roofs
• New roofs and roof retrofit
• Innovated green roof design
• Educational value of demonstration
• All Properties within the Combined
  Sewer Overflow Zone (CSO) are eligible
• Geographic and building use diversity
• Size of Projects with priority given to
  spaces larger then 3500 square feet
• Retrofits

The Green Roof Subsidy Program (the Program) is funded wholly, or in part by the Government of the District of Columbia, District Department of the Environment, Watershed Protection Division with the purpose of subsidizing and encouraging green roof projects in the District of Columbia within the Combined Sewer Overflow Zone.

The purpose of the project is to demonstrate greenroof technology, encourage its use and illustrate the feasibility of greenroofs to help manage storm water – to reduce excessive runoff and to improve water quality. The grants are intended to partially defray the additional costs of a greenroof. The subsidy will be in amounts that approximate up to $3.00 a square foot of the greenroof cost for each qualified building with a cap of $12,000 per property.

Applications are due September 9th.

For more information and to download an application go to www.DCGREENWORKS.org or http://web.mac.com/trees14/Site/About__Green_Roofs.html

MAIL APPLICATIONS TO DC GREENWORKS 3030 12TH STREET N.E. WASHINGTON, DC 20017
 

Chinese City Goes for Carbon Emissions Gold

As most individuals involved with green building probably know, green building is just one strategy to combat the overall global warming and carbon emissions issue.  Green building strategies, it is believed, reduce CO2 emissions, thus helping combat global warming.

Numerous cities, states, entities and individuals have pledged to become carbon neutral.  A pledge of carbon neutrality means that the entity pledges to “balance the amount of greenhouse gases it emits through industry and other human activities with the amount of greenhouse gases it eliminates.”  A recent article highlights a Chinese city, Rizhao, which has declared its intentions to become carbon neutral.  

So how exactly does a city become carbon neutral?  Not surprisingly, the push for carbon neutrality in Rizhao required changes to existing building codes and construction practices: 

“The first important measure was to popularize solar hot water," says Wang Shugang, chief of Rizhao's EPB. Nearly every building in Rizhao now supports dark arrays of tubing to heat the water, or grill-like units beneath the ubiquitous enclosed terraces of most apartments.

Obviously, not every building will voluntarily agree to install new “tubing and grill-like units” to deliver solar hot water.  Mandatory changes in construction practices to incorporate green building strategies require changes to existing building codes.  Cities throughout the United States are currently making similar, but less stringent green building changes to building codes.  

While changes to green building codes may be feasible in the United States, the second step undertaken by Rizhao seems less plausible:

The second important step, according to Wang, was to "shut down many small-size enterprises [that] are really high consumers of coal as well as use central heating. New enterprises don't need their own boilers."  Industries that shut down or moved as a result of the go-green effort include cement, papermaking and steel.

Could you imagine the constitutional challenges that would occur if a United States city attempted to re-locate high-polluting industries?  Based on these potential legal challenges, it may be some time before we see a United States city pledge carbon neutrality.

It appears that Rizhao has recognized some legal constraints on its push for carbon neutrality: 

Rizhao is the ninth biggest port in all of China, according to Fan, exporting seafood and other goods to Japan and South Korea. It's difficult to make such shipping carbon-neutral, he notes. "We can't do anything for those ships because they do not belong to us."

At some point, a United States city may pledge to become carbon neutral.  The relevant legal issues and challenges will set an important precedent for the construction industry.  

 

Aspen Codes Ahead of the Green Building Curve

As green building becomes more popular, new green building regulations continue to pop up in U.S. cities.  The Aspen Daily News recently highlighted proposed changes to the Aspen Commercial Building Codes that will incorporate very progressive green building strategies.  Among the green building strategies, the proposed codes will “require either a photovoltaic solar panel system [solar panels] or payment into a renewable energy fund to offset exterior features such as snowmelt systems and heated pools.”  The City Council’s proposed enforcement mechanism for the green building codes is particularly of interest.

In the article, Aspen’s chief building official describes the proposed building codes as “all carrot and no stick,” meaning that the codes will rely on incentives instead of penalties for enforcement.  For example, commercial projects will receive from the city “triple the credit for energy generated by the solar panels rather than through payments into the [renewable energy fund].”  Essentially, commercial projects can either invest in solar energy or pay three times as much into the solar energy fund.  Quite the incentive to invest in solar energy. 

The Aspen City Council made a major change to the proposed code by eliminating “a requirement that buildings larger than 25,000 square feet submit to an energy audit every five years, and that the results of that audit be used to apply credit or debit to a particular building’s energy target.”  Good decision, Aspen City Council.  Could you imagine trying to enforce this provision? 

Aspen’s chief building official stated that the city “can find no examples of other municipalities that have implemented a program that requires owners to pay if they do not meet efficiency targets.” I can think of one…

A Green Building Performance Bond

    When people ask me about green building lawsuits and legal issues, I usually start with Washington D.C.'s Green Building Act of 2006
  
    The Green Building Act is a very progressive Act that requires both that private and public projects comply with specific green measures.  I have written more extensively about the Act in the article "What's Your Green Construction Strategy" available here

    The biggest problem with the Green Building Act is the green performance bond requirement.  When I read this performance bond requirement I literally gasped so I am going to post portions of it word-for-word.  Please note that "section 4" details green building requirements for privately-owned construction projects: 

    (b)  On or before January 1, 2012, all applicants for construction governed by section 4
shall provide a performance bond, which shall be due and payable prior to receipt of a certificate
of occupancy.

    (g)  All or part of the performance bond shall be forfeited to the District and deposited in
the Green Building Fund if the building fails to meet the verification requirements described in
sections 3 and 4.

Did you gasp?  If not, make sure you catch my later posts detailing the potential problems with this green performance bond.
 

400% Increase in County Green Building Programs

    Green building is growing in popularity at a rapid pace.  One reason for the increased popularity are states, cities and towns that have passed laws, regulations and ordinances mandating green building.  These green building laws, regulations and ordinances will also result in an increase in green building litigation. 

    Want  evidence of the popularity of green building?  According to the AIA, counties with green building programs have increased over 400%.  Even more interesting, the AIA study only looked at 200 of the most populous counties and found that 39 of them had green building programs, while 9 more are developing green building programs. 

    With more green building programs, chances of legal challenges increase.  This litigation could be in the form of a challenge to a county's program.  Or parties may fail to comply with the green building programs, resulting in litigation with the county or the party responsible for failing to comply. 

    Among the counties recognized as having "solid best practice examples of programs" is Montgomery County, Maryland.  We will take a look at Montgomery County's program later