Green Building Law Update

Environmental Law and Sustainability for Business

Buying a LEED Certified Building Is Easy But ..

By Stuart Kaplow on Posted in LEED

Despite that a frog told us all in a song lyric, “it’s not easy bein’ green,” it is easy to buy a green building, but ..

And there are many good reasons for purchasing a green building that is LEED Certified. LEED gave us the technologies and methodologies revolutionizing the way we construct and occupy buildings. And while there is no debate that a LEED Certified building has a higher return on investment than a comparable nongreen structure, the certification in and of itself may be of particular import for a building that benefits from a government incentive arising from LEED certification or for a building advantaged by a contractual arrangement requiring it be LEED Certified.

Today when there are more 95,600 LEED Certified projects, with many of them among the most desirable buildings in their respective market, those innovative buildings are regularly being bought and sold. In fact we know from the proprietary data of a commercial real estate information company that LEED Certified buildings are being conveyed at a faster pace than the broader commercial real estate market.

That being the case, then why has the GBCI Change Of Owner Agreement been uploaded into LEED Online only 700 times since February 2015?

Recognizing that the ownership of buildings frequently changes, GBCI created the change of owner form in order to be able to update its directory and to honor the current owners of GBCI-certified projects. The form can be used to indicate the change of ownership for any projects certified by GBCI, including LEED, SITES, and PEER,”

according to Susan Dorn, the General Counsel of USGBC and GBCI.

So, GBCI even provides a form, making affecting the change in their system easy, but the Change of Owner Agreement form is little used. Is it possible, “what we’ve got here is failure to communicate” similar to the plight of Paul Newman in the 1967 movie classic Cool Hand Luke? Is it possible that real estate professionals are flouting care and caution and do not know the form exists?

The standard of care today has evolved such that in a contract of sale for a commercial building that is LEED Certified, the due diligence materials provided by the seller to the purchaser must include access to the LEED Online project registration or a copy of the entire LEED Online project file (that can be downloaded).

Additionally, the contract will include representations and warranties describing that the building is LEED Certified under a particular rating system (e.g., LEED New Construction v2009 Silver Certified), include the “project name” used in the GBCI application as well as the GBCI ID Number.

Moreover, within the representations and warranties about contractual obligations that will survive closing may properly be something like, “To satisfy the LEED NC v4 EAc7: Green Power and Carbon Offsets credit, the building has entered into a contract for qualified resources that have come online since January 1, 2005, for a minimum of five years, to be delivered at least annually. A copy of the contract, which is attached in Exhibit __ specifies the provision of 100% of the project’s energy from green power, carbon offsets, or renewable energy certificates (RECs).”

And there are other obligations associated with LEED that may survive closing (e.g., the credit indoor chemical and pollutant source control, the obligation to submit energy and water consumption data to USGBC, etc.), but this law firm regularly reviews contracts of sale that fail to make any such disclosures. More than 39% of LEED NC 2009 projects have achieved the Green Power credit, arguably the most common rating system for a building being sold this year, but we know anecdotally the obligation is rarely disclosed in a contract of sale; something potentially imposing post closing liability on the seller.

Finally, a contract of sale should list as a document to be delivered at closing (.. but arguably most do not), in addition to a warranty deed, originals of all leases and the like, “a GBCI Change of Owner Agreement completed and executed by the seller.”

But assuming none of that happens, yet someone acquires a LEED Certified building and desires to pursue recertification or even just be correctly listed in the LEED Project Directory, GBCI will have your back, as Susan Dorn explains,

We are also aware that it’s not always possible to obtain the signature of the initial owner after a period of time has passed. In such circumstances, GBCI legal works with the current owners to find ways they can demonstrate their ownership interest [for example, a copy of a deed].  USGBC and GBCI want to celebrate, with the current owners, their pride and value in their LEED certified buildings.”

From time to time this firm is asked to provide an “opinion of counsel” that a LEED Certified building is really a LEED Certified building and while we do provide legal opinions such is more common as a condition of a lender for financing, including often in a lender program offering a discounted interest rate for green building.

Purchasing a LEED Certified building, or a project certified under any of the GBCI rating systems, is easy, but in this new and emergent field of green building, there are now resultant accepted legal niceties, including delivery of a GBCI Change of Owner Agreement, that are necessary and proper between seller and buyer.

Green Building Codes Not Eligible for Copyright Protection

By Stuart Kaplow on Posted in Codes and Regulations, Green Building

A decision earlier this month by the Eleventh Circuit United States Courts Of Appeals goes further than other modern courts in describing that building codes when adopted by local government cannot be copyrighted.

Ruling that “the law,” whether by statute, ordinance, regulations, or code, and even when its source is a judicial opinion, is not subject to federal copyright law, has broad implications, particularly for green building.

And it is not new law that government’s building codes are unprotectible under copyright law, although not all courts have been universally consistent across the country, but this federal appellate court’s rationale has implications for all building codes, and not just for the new 2018 IgCC being released next month, but also for LEED where compliance with the private rating system is made a requirement by law.

To appreciate the importance of this court ruling, by way of example, as the organizational author of original works, the U.S. Green Building Council indisputably holds a copyright in its LEED rating systems. See 17 U.S.C. § 102(a). The question might be if a person infringes on USGBC’s copyright if they post the LEED rating system online? Put another way, does USGBC retain the right wholly to exclude others from copying the rating systems after and to the extent to which they are adopted as “the law” of various jurisdictions? The answer to this narrow issue, while debated in the past, seems compelled by this new decision, that was actually about a private party’s annotations to the legislature’s enacted law.

Excluding “the law” from the purview of the copyright statutes dates back to this nation’s earliest period. In 1834, the Supreme Court in Wheaton v. Peters interpreted the first federal copyright laws and unanimously held that “no reporter has or can have any copyright in the written opinions delivered by this Court …” That decision was the foundation of our continuing understanding that “the law,” whether articulated in judicial opinions or legislative acts or ordinances, is in the public domain and thus not amenable to copyright. Courts have applied that still governing law to rule that the building codes of various governments from Massachusetts to Texas cannot be copyrighted. But in recent years, some courts have sought to distinguish cases from that bedrock law.

And such is why this new decision from the Eleventh Circuit is so important.

It uses an untrammeled and broader rationale, “.. confronting profound and difficult issues about the nature of law in our society and the rights of citizens to have unfettered access to the legal edicts that govern their lives” to hold that no valid copyright interest can be asserted in any part of a code adopted by government.

The court provides a fundamental lesson in American history when it explains, the United States Constitution grants Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, Sec. 8, cl. 8. Congress has exercised this power by passing what is described as the single most important law in American history, the Copyright Act. 17 U.S.C. § 101, et seq.

Copyright protection subsists .. in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. 17 U.S.C. § 102.

That is, “authorship” is central to copyright law. Only “original works of authorship” are eligible for copyright protection.

The court explains that the meaning of authorship takes on special significance in instances like this where we consider the copyrightability of a government edict. A long line of judicial authority, stretching back more than 180 years, establishes that, with respect to certain governmental works, the term “author” should be construed to mean “the People,” so that the general public is treated as the owner of the work.

The metaphorical concept of citizen authorship actually dates to James Madison’s government as “the public voice” in Federalist No. 10, as he argued for the ratification of the United States Constitution.

The “rule that legislative codifications are uncopyrightable derives from an understanding of the nature of law and the basic idea that the People, as the reservoir of all sovereignty, are the source of our law.” This is a true today as it was in 1787.

The 2014 confidential agreement signed by ICC, ASHRAE, the American Institute of Architects, the IES, and the USGBC “to collaborate on the development of future versions of Standard 189.1, the IgCC and the LEED green building program,” does not defeat the foundational American law concept that the people are the authors when writings are adopted as the law by governments. Moreover, existing only as a creature of standards, rating systems and codes, green building is particularly vulnerable to this decision.

And answering the question posed above, to its credit the USGBC has long ago addressed this issue when the LEED Terms and Conditions includes,

“Permission is hereby granted to those wishing to use, reproduce, and/or display all or any portion of any LEED® Rating System appearing on the USGBC website in the form of a limited, royalty-free, nonexclusive, revocable license, so long as the user attributes the permission of and authorship and copyright to the U.S. Green Building Council, Inc. in any such use, reproduction, and/or display.”

This blog post does Not suggest that anyone violate a claimed copyright on a code or otherwise, but it is time the green building industrial complex reconsider how green building standards, rating systems and codes are developed and managed.

This case is Code Revision Commission v. Public Resource Org, Inc. In the United States Courts Of Appeals for the Eleventh Circuit, No. 17-11589, filed October 19, 2018.

RELi Could be Standard Practice in Nearly Every Real Estate Transaction

By Stuart Kaplow on Posted in resilience

RELi 2.0, a comprehensive rating system that provides strategies and tools for resilient building and design, is expected to be launched on Monday, November 12th.

The launch of RELi 2.0 is significant because it is widely suggested, just as a Phase I Environmental Site Assessment is now standard practice in nearly every commercial real estate transaction in this country, that in the future the same will be true of a resilience assessment.

The Green Business Certification Inc.’s newest rating system, RELi 2.0 will help identify and reduce the risk of damage in the event of a natural disaster, economic disruption, resource depletion or other crisis for buildings, homes, neighborhoods and infrastructure.

Much more than only anticipating weather extremes, in the draft document expected to be approved in the coming days, RELi 2.0 criteria include acute hazard preparation and adaptation strategies along with chronic risk mitigation at the building and neighborhood scale.

Susan Dorn, the General Counsel of USGBC and GBCI could not be more emphatic,

RELi 2.0 offers the most comprehensive certification available anywhere for environmentally and socially resilient design. By selectively bundling existing sustainable and regenerative guidelines with RELi’s groundbreaking credits for emergency preparedness, adaptation, and community vitality, RELi 2.0 is designed to protect occupants, offer shelter to those in the nearby community, allow business continuity, and reduce the cost of disaster-related repair and rebuilding.

Resilience is becoming widely accepted. In a conspicuous example, language in the Defense Authorization Act for Fiscal Year 2019 for the first time requires the Department of Defense, the largest owner of buildings in North America to respond to sea level rise and flooding by constructing new mission critical buildings 3 feet above the base flood 100 year elevation. Of note, RELi 2.0 addresses the issue differently, when it prescribes, “building on green field sites below the 500 year floodplain is not permitted.”

And New York, the largest city in North America, tackled resilience with the NYC Climate Resilience Design Guidelines v2.0 on April 28, 2017, addressing the same flooding issues, but differently, acknowledging the large urban area’s drainage systems are designed to handle approximately the current 3 year storm (.. not RELi’s 500 year storm).

RELi was first developed over 5 years ago by the Institute for Market Transformation to Sustainability and adopted by MTS in 2014, following the ANSI accredited American National Standards procedure. Since 2017, RELi has been managed by the USGBC which, in conjunction with MTS and others led the evolution of RELi 2.0 in large measure synthesizing the LEED Resilient Design pilot credits with RELi’s Hazard Mitigation and Adaptation credits.

RELi 2.0 is similar to LEED in format with certification by GBCI based on a point system. The 15 requirements within the rating system are mandatory and do not carry a point value. Optional credits have point values, allowing projects to seek credits and certification levels that fit their needs. Point values are: 300 to 349 points earned for RELi Certified, 350 to 440 points earned for RELi Silver, 450 to 599 points earned for RELi Gold, and 600 to 800 points earned for RELi Platinum.

Those in the know have described RELi 2.0 as by far the best GBCI associated rating system since LEED v2.2.

The gravitas of this update from version 1.2.1 is made clear by the draft’s own words, “[t]he RELi 2.0 Rating System assumes that there will be an initial emergency response from state and/or federal emergency authorities within four days after the occurrence of a major event.”

As one might expect the rating system contains a requirement, Hazard Mitigation + Adaptation requirement 2.0 Fundamental Emergency Operations: Back – Up Power, that makes a prerequisite of “permanent back – power, switching gear and/ or power hook – ups, and infrastructure for temporary generators ..”

There is a credit, Productivity, Health + Diversity 4.0: Human + Eco HPD: Reduce Pesticides, Prevent Surface + Groundwater Contamination, that rewards “no pesticide, herbicide or fertilizer use” and while such is well intentioned, the credit will have limited geographic appeal as pesticide use, to control mosquito borne disease and the like is widely practiced in many places in this country and the world.

True to the inability to end the long running and loosing wood war, Materials and Artifacts A Credit 5.0: Use Legally Logged Wood from Ecologically Managed Forests, recognizes “FSC Certified Wood” only, (.. okay it is not the Peloponnesian War) and such and is more a distraction than a negative.

Similar to the LEED Innovation and Design Credits, the RELi Applied Creativity credits were created with the intent of providing projects the opportunity to be awarded points for exceptional performance. Up to 20 AC Credits can be awarded for creative thinking and innovative techniques.

Just about the only criticism of RELi 2.0 is that the 91 pages of rating guidelines reads like an architect’s dystopian rule book for society, however, for those readers old enough to have participated in ‘duck and cover’ (under our desks) elementary school nuclear attack drills or had a Cold War era bomb shelter in your back yard, these guidelines seem tame.

In an age where deaths from natural disasters have fallen precipitously, when many believe that the biggest global risk in the future is a pandemic disease outbreak, RELi 2.0 even advances pandemic preparedness.

Mike Italiano, one of the founders of USGBC and CEO of MTS, reiterates, what he sees as only a genesis, “RELi specifies resilience design and construction performance metrics for buildings, homes, communities and related infrastructure.”  He goes to elevate the opportunities,

RELi was also created to serve as an underwriting standard, by identifying resilience metrics which increase tangible economic value / green + resilient building bond cash flow.

And Mike quantifies that vision acknowledging that there are dollar costs, “resilience is the most expensive market in history.  RELi Special Reports issued by CMP and Perkins+Will in 2017 documented existing resilience costs of $6.8 trillion for Pennsylvania and Massachusetts, with $1.9 billion and $326 billion respectively for accelerating sea level rise flooding.  Fortunately, investors with over $70 trillion in assets want to buy Green + Resilient Bonds creating favorable bond financials documented in the Green Bond Business Case released at the NYSE and updated by leading economists.”

If you doubt that a resiliency assessment and underwriting will in the future be standard practice in commercial real estate transactions in this country, be aware that Mike chaired the panel that created the ASTM standard for the Phase 1 Environmental Site Assessment. He already revolutionized real estate once. And then there was his role as a co-originator of LEED. Two. You might want to follow his lead this time about resilience and learn about RELi (.. by the way, pronounced ri’lai like rely).

RELi 2.0 is being soft launched on November 12th and projects can be piloted even in advance of a final online process.

There will be a free RELi 2.0 kick-off and education session that will highlight a case study of a project pursuing RELi certification, on Monday, November 12 in Chicago (just before Greenbuild), from 1 – 5 pm. For more information and register click here.

Is There Lead in the Drinking Water of Your Green School?

By Stuart Kaplow on Posted in Environmental, Green Building

EPA and the Centers for Disease Control and Prevention agree that there is no known safe level of lead in a child’s blood. Lead is harmful to health, especially for children.

Though most lead exposure occurs when people eat paint chips and inhale dust, the EPA estimates that up to 20% of lead exposure comes from drinking water. Lead enters drinking water through multiple pathways and the largest quantity is through corrosion, that is a dissolving metal caused by a chemical reaction between water and plumbing. The most significant factor in the extent to which lead enters the water is “water age,” that is how long the water stays in pipes.

EPA advises drinking water in schools is particularly important because children spend a significant portion of the day in these facilities and are likely to consume water while they are there.

Against that backdrop, to reduce indoor water consumption, LEED v4 New Construction offers points for further reducing by 25% and up to 50% “fixture and fitting water use from the calculated baseline in WE Prerequisite Indoor Water Use Reduction.” Other green building programs have similar targets.

Very low use at each fixture in bathrooms, coupled with large diameter pipes stipulated by plumbing codes, at a recently tested school this firm is aware of, resulted in an average overall premises water age of 8 days. Water age of 8 days raises concerns with respect to lead, but also with respect to the chemical and microbiological stability of the drinking water. There are externalities associated with water age, including that a disinfectant residual (e.g., a residual level of chlorine) is generally not maintained in the plumbing of a building with a water age over 3 days.

But little of this including lead is regulated.

Lead is regulated in public drinking water supplies under SDWA, a federal law that was initially passed in 1974. SDWA requirements apply to “public water systems.” Schools that are served by a public water system are not subject to SDWA monitoring and treatment requirements because those schools do not meet the definition of a public water system. The vast majority of public water suppliers do not include schools in their sampling plans because regulations only require sampling of single family dwellings.

To address this gap in testing, EPA developed a guidance document, 3Ts Technical Guidance for Reducing Lead in Drinking Water in Schools. EPA advises that schools may have elevated lead concentrations from the plumbing in the facility because the potential for lead to leach into water including because of the water age.

Several states have recently taken action to address concerns regarding lead in drinking water in schools. For example, in 2017 legislation was enacted in Maryland and in 2016, legislation was enacted in New York to require schools to test drinking water for lead contamination. Also in 2016, New Jersey adopted regulations regarding testing for lead in drinking water in public schools statewide, and Rhode Island enacted legislation to provide grants to local governments to conduct lead testing.

But the testing is daunting. There are 1,447 public and 1,397 nonpublic schools in Maryland alone and it will take almost 5 years to test those; which of course does not include addressing any conditions found. But a flaw in the Maryland and New York testing protocol is that they are starting with older schools, under the mistaken impression that aged pipes in pre 1988 schools are the key problem; when in fact newer green schools with water reduction features can have water age issues that results in lead in drinking water.

But the issue is real. As of September 28, 2018, the Maryland Department of the Environment has received the first required lead in water sample results from eight public school systems and 89 nonpublic schools. Of this number, 539 of the 22,327 samples exceeded the state self imposed action level of 20 parts per billion of lead. It should be noted that some think that action level is too high.

This is a tough subject. Have the green building programs not taken into account science in the area of water quality in the quest to reduce the quantity of water used? More and additional research is needed now from the environmental industrial complex to assist in justifying potable water conservation goals without compromising water quality and the public health.

Until there is new and good research. Many are suggesting new to be constructed schools should not exceed minimums for water use reduction required by green building programs.

All schools and day care centers should test for lead in drinking water, now.

And you might want to test the water in your green building for lead.

With Over $3.6 Trillion in Value You Should Pay Attention to GRESB

By Stuart Kaplow on Posted in GRESB, LEED

For the uninitiated GRESB assesses the sustainability performance of real estate and infrastructure portfolios worldwide. GRESB is the global environmental, social and governance (ESG) benchmark for real estate assets.

GRESB’s stated “mission is to enhance and protect shareholder value by assessing and empowering sustainability practices in the real asset sector.”

They do that by offering ESG data transparency in scorecards, benchmark reports and portfolio analysis tools.

The bottom line is that ESG data is increasingly used by institutional property investors to make investment decisions. There are meaningful differences between real estate owning companies and GRESB provides ‘actionable data’ within a framework for an assessment of the differences that influence risk and returns.

Of course there are strong geographic variations in when and how investors including capital markets engage on ESG. European investors are significantly more engaged than U.S. investors (some speculate publicly associating with United Nations global warming rhetoric results in U.S. investors being less engaged).

But you care because this year 903 property companies, REITs, funds, and developers participated in GRESB’s annual Real Estate Assessment, an increase of 6% over the previous year. The Assessment now covers more than 79,000 assets (.. of which more than 49,000 reported at the asset level versus only company portfolio data) in 64 countries representing over $3.6 Trillion in gross asset value.

A trillion is 1,000 times larger than a billion, so 3,600,000,000,000 in gross asset value is a huge dollar amount. Hence you should be paying attention.

The GRESB listed real estate data covers 207 entities representing 61.2% coverage of the major developed listed real estate indices. This includes 75 of the top 100 largest REITs by market cap. The non-listed real estate dataset covers 666 private entities, representing 75 of IPE’s Top 100 Real Estate Investment Managers (participating with at least one fund).

And you should really care because GRESB data is incredibly valuable not only for institutional investors in real estate on the East and West coasts of North America, but also for banks, brokerages and a host of others interested in risk and returns in a broader breadth of real estate owning entities. GRESB data assessments are guided by what the industry considers to be material issues in the sustainability performance of real asset investments.

Owners participating in the annual Assessment receive comparative business intelligence on where their data stands against their peers, a roadmap with the actions they can take to improve their ESG performance and a communication platform to engage with investors.

Significantly, the 2018 global average GRESB Score increased to 68, up from 63 in 2017. This “strong improvement reflects the industry’s commitment to further integrate best practices related to ESG issues.”

Periodically a new issue emerges as an important consideration for investors in real estate and in response to a string of weather related disasters in 2017, this year resilience was such an issue. This motivated GRESB to introduce a new Resilience Module for both property and infrastructure thus providing nearly 150 resilience related data elements about each company for those investors now interested in resilience.

This law firm works with businesses interests to assess ESG matters including those that can best advantage them with capital markets.

There is no doubt that increasing numbers of investors are taking ESG data into account in their investment decisions, with governance being the most common dataset they consider, and GRESB is the best at  offering ESG data transparency in real estate assets through its data scorecards, benchmark reports and portfolio analysis tools.

GRESB B.V., formerly known as the Global Real Estate Sustainability Benchmark, is a private limited company incorporated in the Netherlands that is a wholly owned subsidiary of Green Business Certification Inc., the Washington DC based non-profit entity related to the U.S. Green Building Council, Inc. In concert with USGBC, GRESB B.V. undertakes the day-to-day management of GRESB’s activities. The 30,000 foot view is what USGBC LEED certifies on a building basis, GRESB assesses on a portfolio basis.

You should begin to take advantage of GRESB’s incredibly valuable data.

Net Zero Certification Program Announced by USGBC

By Stuart Kaplow on Posted in Green Building, LEED

Much as NASA developed dozens of life changing and useful inventions that benefitted all as it raced to the moon, USGBC may be the catalyst for new, cutting edge technologies in the race to net zero buildings.

There is no doubt that the newly announced LEED net zero certification program is aspirational. LEED has always pushed market transformation. This new program does not mean USGBC is abandoning its long term goal of regenerative LEED building, but rather this has been characterized as a response to intense interest articulated by some of the more activist LEED stakeholders who want to get there now and not wait for the marketplace.

USGBC announced last week that it will be unveiling the Beta version of a new Net Zero Certification program at Greenbuild in November. Based on conversations with senior policy making staffers at USGBC, here is what they plan to announce:

Net zero certification will be awarded to projects that demonstrate any or all of the following: net zero carbon emissions, net zero energy use, net zero water use and net zero waste.

Net Zero Certified will be an enhancement or additional reward for LEED certified buildings.

Projects will have to provide 12 months of performance data across any or all of these categories to GBCI through the LEED Online platform. Projects can see their carbon and resource impact in LEED Online in their analytics section (carbon/resource analytics).

Net Zero Carbon Emissions Certification:  Projects must achieve a carbon balance of zero. This will be calculated based on emissions produced from energy used plus emissions produced from transportation minus any offsets recognized by the LEED v4 EA category (both BD+C and O+M).

Net Zero Energy Use Certification:  Projects must achieve a source energy use balance of zero. This will be calculated by energy generated on site plus any offsets recognized by the LEED v4 EA category (both BD+C and O+M) minus source energy consumed.

Net Zero Water Use Certification:  Projects must achieve a potable water use balance of zero. This will be calculated by water re-used on site plus any greywater from a municipality or an external site minus potable water consumed.

Net Zero Waste Certification:  Any projects achieving GBCI’s TRUE Zero Waste certification at the Platinum level will be awarded Net Zero Waste Certification.

Much of the substantive detail can be already be gleaned from the existing program components to be piggybacked. And such is no doubt a further positive.

What is yet to be seen is how many project owners will pursue certification under this Beta program (not to mention follow up with annual recertification)? In an era when concern over legal liability for building claims is real, not only enforced by the FTC and state attorneys’ generals, but also in consumer class action suits, it is likely unwise to make the claim that a building is net zero energy use or the like, .. what does net zero mean?

USGBC says that their definition of what is net zero is in line with the WorldGBC defined term. “The WorldGBC definition of a net zero carbon building is a building that is highly energy efficient and fully powered from on-site and/or off-site renewable energy sources.”

On the other hand, the U.S. Department of Energy says, “Generally speaking, a zero energy building produces enough renewable energy to meet its own annual energy consumption requirements, thereby reducing the use of nonrenewable energy in the building sector.”

The Merriam-Webster definition (referenced by many building codes for definitions not appearing in the code) of net-zero is “resulting in neither a surplus nor a deficit of something specified when gains and losses are added together.”

And there are ‘real’ definitions in statute, including in California and in legislation pending in Washington DC. A net-zero energy building described in the pending energy code in DC, in by Appendix Z is “a highly energy-efficient building that produces onsite, or procures through the construction of new renewable energy generation, enough energy to meet or exceed the annual energy consumption of its operations.”

Even as some aspire to get to net zero energy (.. of course, trailblazers have already produced a limited number of net zero energy buildings), there is no single or widely acceptable definition of what it is. And this is without delving into the philosophical distinctions between net zero site energy, net zero source energy, net zero energy costs, the definitions above may be similar, but they are not the same.

And those distinctions do not address the marginal social cost of getting from ‘very low energy’ to net zero and whether or not this is sound environmental policy?

Building owners pursuing net zero should proceed with caution and mitigate their risk, including by not making any such representations to consumers and with careful word choice in the commercial arena, .. possibly incorporating words similar to “designed to participate in GBCI Net Zero Energy Use Certification Program” together with the usual disclaimers (often in leases and other contracts) about what a green building is and is not!

Green buildings are the geoengineering solution to many of the environmental issues of the day. USGBC will now be a catalyst for new, cutting edge technologies with the moonshot to net zero buildings.

Greenbuild – The Target Rich Environment for Green People

By Stuart Kaplow on Posted in Green Building, LEED
Friends from Lorax Partnerships at Greenbuild

I am often asked, “how can I expand my green building business?” And I have offered the same response for more than a decade – attend the Greenbuild International Conference and Expo (.. yes, you will have to talk with people while you are there).

This year Greenbuild is in Chicago from November 14 thru 16.

I do not claim any particular business marketing expertise. But Greenbuild has been a prime source of new clients for my sustainability and green building law practice (.. okay, this blog is actually our number one source of new clients, but Greenbuild is second)!

I have attending a lot of Greenbuilds. Actually my first U.S. Green Building Council “Green Building Conference” (yes, pre Greenbuild) held in conjunction with the National Institute of Standards in Gaithersburg, Maryland in 1994 had only 450 people in attendance. While attendance in recent years is off a bit from the huge Greenbuild the first time the conference was in Boston in 2008, with 27,995 attendees (.. that was a party!), last year the 24,731 attendees in Boston dwarfed the first Greenbuild in 2002 when a mere 4,189 people gathered in Austin.

Those 24,731 attendees last year were from 96 countries, despite the internationalization of LEED and several worldwide Greenbuild expos including in India, Mexico, Germany and China.

Greenbuild attracts all types of wild things. Last year 28% of those in Boston were from architecture or engineering firms, 15% were utilities, 11% were contractors and builders and 8% were manufacturers, not to mention the very large numbers of professionals offering services and consulting, including, yes, a respectable assemblage of real estate attorneys.

And Greenbuild is sustainable. My favorite fact reported by Informa Exhibitions (.. USGBC sold Greenbuild some years ago) is that each participant produced 5.7 lbs. of waste (of which more than 90% was diverted). And if that number does not excite you, Informa tracked and reported the alternative fact that total water footprint of the event was 7,272,158 gallons.

Last year there were 703 exhibitors on the 169,000 square feet Expo Floor. It is all but impossible not to encounter new vendors and innovative suppliers. Educational activities abound with more than 200 formal sessions.

Those 2017 demographics are proof that Greenbuild is the largest green building gathering each year and unquestionably the par excellence opportunity for networking among “green people” and the best place for networking is the Expo Floor.

Greenbuild 2018 in Chicago will be “the” target rich environment for green people this year. It is your chance to not only rub elbows with USGBC CEO Mahesh Ramanujam, the man to know, but also the thousands of others who make a living in the environmental industrial complex.

It is just over 50 days until this once a year opportunity to enlarge your green building business.

For those who will complain that this blog post is shameless promotion, that may be true, but it is also correct that Greenbuild has been a prime source of new clients for my law practice for more than a decade! LEED is still where it is at in green building. It has become all but a spiritual movement, with more than 94,000 registered and certified projects participating in LEED across 165 countries and territories. Every day, 2.4 million square feet of building space certifies to LEED.  I won’t promise you will meet your next spouse among one of the more than 14,000 individual USGBC members, but if you want to benefit from that business volume, you should be at Greenbuild.

As a reader of my blog, if you email me before Greenbuild, I will gladly buy you a cup of coffee or other libation at a Chicago watering hole. I made a similar offer last year and had a great time meeting a lot of very fun people for drinks in Boston. I hope to see you in Chicago in November.

Modern Slavery Exists and We Must Stop It Now

By Stuart Kaplow on Posted in Green Building, Sustainability

There is a lot of green building going on at BREEAM USA from a pilot program for BREEAM In-Use with multifamily properties to the certification of the first BREEAM USA In-Use office tower, but what is no doubt most impactful is the BRE Ethical Labour Sourcing Standard enabling businesses to commit to eliminating any possibility of modern slavery or human trafficking in their supply chain.

Slavery in construction is not new, but this is not about the slaves who built the Egyptian pyramids in the Middle Kingdom period of 2600 BC.

Today more than 35.8 million people are victims of forced labor around the globe according to estimates by the British government; more than there have been at any time in history. (That shockingly large number does not include forced prison labor, including for example the widely reported Chinese prison labor-derived nails that entered the United States.)

“To truly regard sustainable buildings in a holistic manner, it’s our obligation to start with the supply chain serving the construction industry,” says Barry Giles, CEO of BRE America.  “BRE is at the cutting edge of transforming buildings for the future and in creating the Ethical Labor Sourcing Standard, BRE shines at the forefront of sustainability by acting beyond reproach in all aspects of the built environment and genuinely building a better world together.”

The BRE Ethical Labour Sourcing Standard is not simply an intellectual exercise. This law firm has worked with businesses, non real estate and real estate alike, in their disclosures required by the California Transparency in Supply Chains Act of 2010 of their “efforts to eradicate slavery and human trafficking from [their] direct supply chain for tangible goods offered for sale.” The new Standard will provide third party benchmarks that all companies, including those in the green buildinethical laborg industrial complex can rely upon when complying with the California law and when simply striving to do the right thing.

While there is no single or widely accepted definition of Environmental, Social and Governance, matters of slavery should be disclosed. Ethical labor is becoming widely considered and articulated in ESG disclosures by clients of this firm.

The BRE Ethical Labour Sourcing Standard can be seen as responding to Great Britain’s Modern Slavery Act 2015, which sets a basic benchmark for ethical business practice in the sourcing of labour and contains significant measures aimed at preventing forced labour and human trafficking. In particular the Act:

Defines clearly the offences of forced labour and trafficking and how others might be considered complicit in these forms of exploitation; and

Establishes reporting requirements for companies relating to efforts to combat forced labour and trafficking – including specific reporting requirements aimed at achieving transparency in the supply chain, not just the UK based business.

Moreover, the new Standard will have direct application with the enactment of the Commonwealth of Australia’s Modern Slavery Act, which was introduced to the Australian Parliament at the end of June, and follows enactment of the New South Wales Government’s Modern Slavery Act 2018.

These modern enactments by government are only a small step. The ideal of social equity can be traced back to the works of Aristotle and while definitions vary and have evolved over thousands of year, most would agree humanity has not done enough, including that despite purporting to address social equity as one third of the sustainability triple bottom line, today’s green building standards have failed miserably in responding to issues of modern slavery on construction sites and building material supply chains.

The largest study of the typology of modern slavery in the U.S. found construction as one of the top 25 industries where slavery takes place today.

Green building has never emphasized the social equity component of the triple bottom line. In response to criticism of that deafening silence in the ratings systems, there is a LEED pilot credit available for Social Equity within the Supply Chain, informed by the BIFMA e3 furniture sustainability standard, although it is rarely pursued, that addresses workers who are involved in the production of materials and products used in the project. Some suggest the pilot credit is an afterthought that attempts to do too much when it not only requires “no child/ forced/ bonded labor” but also “harassment and grievance procedures” and “anti-corruption and bribery” that are simply uniquely American values not practical most places in the world.

The BRE Ethical Labour Sourcing Standard enables a company to examine and assess its own business practices and then if it desires to demonstrate to customers and other stakeholders the company’s commitment to eliminating ant possibility of modern slavery or human trafficking. The Standard provides a framework that is available free of charge. If a company determines, it can then showcase their ethical sourcing credentials after gaining third party Ethical Labour Sourcing verification from BRE Global.

Slavery has existed since ancient times and despite having been outlawed in nearly all countries, contemporary slavery exists. There is no morally defensible reason for not doing everything in our power to end modern slavery. We must examine and assess our own business practices now.

Green Globes New Multifamily Rating Systems Respond to the Market

By Stuart Kaplow on Posted in Green Building, Green Globes

On July 11 the Green Building Initiative launched the Green Globes Multifamily for New Construction and Green Globes Multifamily for Existing Buildings.

While certainly there is a market in developers of newly constructed multifamily buildings, spending on multifamily construction was more than $61 Billion in 2017, being 18% of all new residential construction spending, up from just 7% in 1993; the sweet spot of these new green building rating systems is anyone looking for a green building discount on a new loan for an existing multifamily building, where Fannie Mae and Freddie Mac held 37% of all mortgages on multifamily properties in 2017, being more than $467 Billion, according to Federal Reserve data.

These new rating systems will wield a positive force in the world responding to the large multifamily market.

Much of that market opportunity is driven by Fannie Mae and Freddie Mac green financing programs. For example, Fannie Mae offers a lower all-in interest rate on a loan secured by a new purchase or refinancing of a multifamily property with a Fannie Mae recognized green building certification.

We are closing a loan for a client this week and the pricing with Fannie Mae has a discounted interest rate spread from 174 basis points to 158 basis points, which will be, literally, Millions of dollars of savings for that multifamily property owner over the life of the loan.

The two new rating systems are likely best characterized as new multi-family “modules” within the existing Green Globes programs. The Green Globes Multifamily for New Construction rating system is modified from Green Globes for New Construction to take into account the specific and unique needs and sustainability goals of multifamily project types and will be uniquely assessed using the existing 1,000 point scale of seven categories: Project Management, Site, Energy, Water, Materials & Resources, Emissions, and Indoor Environment.

The new rating systems are very broad in eligibility (.. more so than other comparable green building rating systems) when a project must be a building or property with a minimum of 5 units.

GBI is known for swiftness n third party certification. There are two timeframes for certification, non-expedited (i.e., normal) and expedited. Expedited Certification for existing building is 30 to 45 days and new construction is 45 to 60 days. Non-expedited certification for existing building is 90 days and new construction is 4 to 6 months.

The program details are in newly published Technical Reference Manuals available on the GBI website. Of import both Green Globes multifamily programs have energy and water-based requirements in addition to the standard Green Globes requirement of achieving a minimum 35% total score out of all applicable points. The purpose of Minimum Requirements is to realize ‘either’ energy or water consumption savings of 15%. Projects pursuing a Green Globes multifamily certification must identify whether they are targeting energy water, each of which have their own requirements. To see the Minimum Requirements for Green Globes Multifamily New Construction and Existing Buildings, click here.

The Existing Building program will not only be a significant driver of new projects to GBI, but those in the know have described it as having the potential to wield a positive force in the world moving the large multifamily existing building market toward green, something current green building standards have not accomplished.

While this post has highlighted (.. the very large) dollar savings available with Green Globes Multifamily for New Construction and Green Globes Multifamily for Existing Buildings, of course the real aim is more sustainable building and in this first month of the programs a surprising number of the inquiries we have received are from property owners seeking to comply with existing laws and mandatory green building requirements, the sweet spot of these new rating systems is a green building discount on a new loan for an existing (refinancing or new purchase) of a multifamily building.

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