Resources on Green Regulations

Today's post seeks to answer a question which I have received numerous times--where do I go for information on green building regulations. The answer is simple--there is no one place. I keep my eye peeled for announcements by municipalities--see new ones in Portland--http://www.cleanedge.com/story.php?nID=3570, West Hollywood--http://www.buildinggreentv.com/keywords/green-building/1068, and Baltimore--http://legistar.baltimorecitycouncil.com/detailreport/?key=3289.

But there are a few resources which have lists of relevant laws and regulations:
A favorite resource of mine is DSIRE's list of incentives and regulations, available here http://www.dsireusa.org/library/includes/map2.cfm?State=ca&CurrentPageId=1&EE=0&RE=1.

Another is Smart Communities Network--http://www.smartcommunities.ncat.org/buildings/gbcodtoc.shtml. The Smart Communities list is nice, if a little dated.

The USGBC has a list as well, which is hard to find directly on their website--http://www.usgbc.org/DisplayPage.aspx?CMSPageID=76&#12.

Certain cities and states list their incentives and regulations in a user friendly fashion, especially Seattle--http://www.seattle.gov/dpd/GreenBuilding/OurProgram/PublicPolicyInitiatives/DevelopmentIncentives/default.asp.

Chicago has a nice website with green resources--http://egov.cityofchicago.org/city/webportal/portalEntityHomeAction.do?entityName=Chicago+Center+for+Green+Technology&entityNameEnumValue=161.

I would advocate that the Council of Mayors or similar organization should create a resource which consolidates green building regulations of various municipalities in one place. For now, I will try to be on the look out for more lists and keep up to date on green building laws as they come to my attention.

Economic Value of Sustainable Communities

Individual green buildings are important, but the long term goal should be to develop sustainable communities. A new report by the Price of Wales' foundation demonstrates the economic and social value of walkable, mixed use and mixed income communities. The report is available here http://www.princes-foundation.org/index.php?id=8.

Among the most interesting analyses is a comparison among new urbanist communities in different supply and demand markets. The report concludes that the new urbanist model "appears to provide the greatest value enhancement where development is taking place in a moderate demand market." However, it records a 30% premium for the new urbanist community in a high supply market, which may be an even more important conclusion.

I Want Hillary Clinton's $50 Billion

On Monday, Hillary Clinton reiterated her proposal to "establish a $50 billion 'Strategic Energy Fund' that would create a research agency focused on reducing the threat of global warming." Among other things, Clinton proposed "spending $1 billion a year to improve energy efficiency in schools and other public buildings." http://www.boston.com/news/nation/articles/2007/07/24/clinton_proposes_1_billion_green_building_fund/

According to the Boston Globe, Senator Clinton proposed paying for the initiative by taxing oil company profits. "Oil companies...would face a choice: invest $20 billion in alternative fuel technology and build cleaner refineries or pay taxes on some of their profits."

As I have said many times before, the government's spending power is a powerful thing, and I support the Senator's plan. And I am also in favor of creating a economic system under which the true cost of petroleum products is included in the price, including taxes and environmental impact.

But I am concerned that I haven't heard anything about changing the investment in infrastructure. The government must not only stop subsidizing the oil companies, but must also decrease investment in highway building and increase investment in alternative transportation mechanisms to reduce our oil dependency. It is absurd that it takes 1.5 hours and $100+ to travel 94 miles from New York to Philadelphia by train.

The presidential candidates need to examine the built environment and build a comprehensive plan, including legal and economic components, to address the global warming/sustainability issue

Leonardo DiCaprio Needs Me

I read in today's Inhabitat that LEONARDO DI CAPRIO to Build “Eco-Town” in Kansas. It appears that the actor is filming a 13-part reality series about creating an environmentally sustainable community in Greenburg, Kansas which was devastated recently by a tornado. I wonder whether Leo and friends have sufficiently taken into consideration the legal issues facing the development of an ecologically sustainable community.

1) Has Leo considered the zoning code of the town? As many of you are aware, zoning may make it impossible to have a town which does not depend largely on automobile transportation due to prohibitions on the mixing of uses. The zoning code may also prohibit the use of green technologies, like photovoltaics or waterless urinals. The zoning code also must ensure that future building endeavors are done sustainably, by at least providing for mixed-use development and facilitating green buildings, and preferably by requiring environmentally friendly building techniques and typologies.

2) Has Leo analyzed whether the building code prohibits the use of green technologies or mandates the use of environmentally unfriendly products, like certain fireproofing and insulation materials?

3) Has Leo interfaced with the Kansas Department of Health and the Environment? Has he analyzed the state and local environmental laws he may encounter when doing large scale rebuilding?

4) Has Leo considered the risks associated with sustainable development and adequately provided for insurance of the new projects in the event of loss?

5) Has Leo developed effective short and long term public transportation plans, interfacing with the Kansas Department of Transportation?

I am waiting for Leonardo DiCaprio's call.

More environmental concerns with green projects

Green Wombat had a nice piece today on wrangling over the rights to build wave power plants. http://blogs.business2.com/greenwombat/2007/07/pge-san-francis.html

The use of wave power will undoubtedly threaten coastal environments. I blogged last week about the high output solar plants being developed, which would require power lines through park land. Some legal compromises will need to be made between current environmental laws and the proliferation of new power plants.

What Happens In Las Vegas...

Although what happens inVegas is supposed to stay in Vegas, what has happened to tax incentives for green building in Las Vegas could spell trouble for the rest of the nation as state and local governments use tax incentives to encourage green building.

In 2005, the Nevada legislature established sales tax exemptions and a property tax exemption -- worth up to 50 percent of the property value for up to 10 years -- to projects that qualify under the Leadership in Energy and Environmental Design standards. Projects meeting the silver level of certification were eligible for a 35 percent property tax break.

Two years later it became clear that so many projects qualified for exemptions that the state budget was going to be severly impacted. There was a good deal of legal hand wringing while it was determined whether the tax break could be repealed. On May 3, 2007, the Nevada legislature voted to put the breaks on hold. On May 14, 2007, the governor vetoed the suspension bill. http://vegaspundit.typepad.com/vegas_pundit/files/greenvetodocs.pdf

On June 4, a compromise bill was passed. According to the Nevada Appeal, "AB621 preserves substantial tax breaks, between 25 to 35 percent in property taxes for up to 10 years, but requires that developers meet higher standards for energy efficiency. The breaks also do not apply to money owed to school districts. The bill also gets rid of sales tax exemptions on construction materials provided by the 2005 law." http://www.nevadaappeal.com/article/20070604/ELECTIONS/106040094&SearchID=73287969383746

More politics, more lobbying, and the the tax panel is now set to consider a proposed regulation to implement the new law on Aug. 6. According to at least one commentator, the new law is likely to have as large loopholes as the original one. http://www.lasvegassun.com/sunbin/stories/commentary/2007/jul/18/566616784.html

So what happened here? Clearly the idea was a good one--use the government's fiscal levers to encourage green building. But hurrying to implement a law before the implications could be thoroughly investigated may have done more harm than good. Now the lawmakers are having to find a way to scale back the incentives, and crushing any further progress for green building intiatives in Las Vegas for some time to come. And there are few places in the country who need to be concerned about conservation--especially water conservation--more than Las Vegas.

I believe that this is only the first legal explosion in the green building area--there are so many new laws and regulations being passed as government bodies seek to jump aboard the green building bandwagon. Financial incentives for green building have a surface appeal--they don't mandate anything, so opposition is generally limited, and they can be counted as "doing something" about environmental concerns. But all incentives are not good incentives--the key is for governments to develop careful, measured incentives by asking two key questions: what will the full fiscal impact be and will the incentive cause changes in behavior which could not be acheived by other, less costly methods. Governments cannot abdicate their responsibility to make good, effective laws which will encourage and enable green building for decades to come by passing easy, ill-thought-out tax breaks.

Kudos to Wells Fargo Bank

Today Wells Fargo Bank announced that "it has surpassed the $1 billion mark in loans for Leadership in Energy and Environmental Design-certified buildings. " according to the Milwaukee Business Journal. See full article here http://milwaukee.bizjournals.com/milwaukee/othercities/eastbay/stories/2007/07/16/daily47.html?b=1184558400^1494032

Green Financing

Building Green had an interesting post today about Green Financing organizations. http://www.buildinggreentv.com/blog-location/workshop-home/945

In addition to financing, of course, insurance is another key component in effective green building. Fireman's Fund has a product called Green Gard. http://www.firemansfund.com/servlet/dcms?c=business&rkey=437 In addition to providing insurance specifically for green buildings, it allows insureds to rebuild green in the event of a loss.

No Good Deed Goes Unpunished

Green Wombat had the following post about a proposed high voltage solar power project in Southern California. http://blogs.business2.com/greenwombat/2007/07/high-voltage-so.html
In short, the problem is that "SDG&E (SRE) needs to build a $1.3 billion, 150-mile transmission line through a state park and other environmentally sensitive lands to get the renewable energy to its customers. " Green Wombat.

The comments on Green Wombat focus on the viability of the high voltage solar power technology, but what interests me more (of course) is the impact of new power plants of any kind on the existing environmental law structure. Wind farms require vast expanses of land, and threaten birds and other animals. As this case indicates, large scale solar will require 1) the power plants themselves, and 2) the transmission lines to get the power to the grid. There will be an inevitable conflict between the Endangered Species Act, inter alia, that will result from what is essentially the construction of new power plants.

The question I pose is the following: should there be different standards applied to "green" power facilities?

Green Life Tip

Discovery Television is launching a 24-hour green channel. See http://planetgreen.discovery.com/ for details.

Can the state rein in McMansions?

Although slightly off the strict green building theme, an interesting intiative in Colorado caught my attention. http://www.time.com/time/nation/article/0,8599,1643151,00.html

In short, Boulder, Colorado wants to institute a McMansion tax. Homeowners who are willing to sign away the right to build larger homes will get a tax credit, and those who want to build bigger homes will have to purchase credits.

My questions are: 1) Is this an illegal restraint on the use of property, and 2) what will its ultimate benefit be?

There is little doubt in my mind that this McMansion tax will fail to withstand legal scrutiny. Since the main objections to McMansions are moral and aesthetic--as well as environmental and economic--I think it might be wiser (and more likely to withstand legal challenge) to tie a fee to ameliorate the impact the house will have on the community and the environment. For example, if there will be additional sewage draw, or roads, or fire protection needed, the inidividual homeowner will need to compensate the community.

Show Me The Money

Another good article on the financial benefits of green building. http://www.theglobeandmail.com/servlet/story/LAC.20070717.PRPROPERTY19/TPStory/Business

Event Alert For Washington DC--Celebrate the first green building on Capitol Hill!

What: Bi-partisan Congressional Delegation Celebrates FCNL "Green" Building When: Thursday, July 12 from 5-7 p.m. Where: FCNL Headquarters (across the street from Hart Senate Office Building) 245 Second Street NE, Washington, DC, 20002

Action by Federal and Municipal Representatives

There have been two actions taken recently which reflect the interest in green building at both the federal and municipal levels. On March 27, 2007 Senators Clinton and Kerry the "Zero-Emissions Building Act of 2007." The bill directs federal agencies to immediately require that all new federal buildings or major renovations reduce carbon dioxide emissions by 50 percent as compared to a 2003 baseline. In 2010, and every five years after that, the emissions reduction level would increase by 10 percent, until new federal buildings become "zero-emissions" buildings in 2030. The legislation would also apply to major renovations of existing federal buildings. The Act is available here--http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s1059is.txt.pdf.

On the municipal level, mayors are banding together to support green building. For example, at their 75th annual meeting in Los Angeles recently, the 1,100-member U.S. Conference of Mayors (USCM) unanimously voted for a green schools resolution. The resolution urges Congress to support K-12 green school demonstration projects. The resolution is available here--http://usmayors.org/75thAnnualMeeting/resolutions_full.pdf. The Conference also passed a resolution pledging local totake local action to significantly reduce greenhouse gas
emissions and to support stronger federal policy and action on climate change.

These two actions are largely symbolic--it is unlikely the Clinton/Kerry Bill will be passed, and the USCM resolution has no legislative impact. However, they represent a recent change in the zeitgeist where the environment is a priority, and green building initiatives are a mechanism for acting to improve the environment.

Today's topic is money. One of my collegues recently told me that until developers see profit in building green, they will not be interested. It appears that day has come, and that REITs and developers are beginning to respond.

The New York Observer published an article on June 26, 2007 about the new Bank of America tower in New York City, which is striving for LEED Platinum. The interesting thing about the article is the dramatic premium developer Douglas Durst is getting for his office space. The Observer article states "Asking rents for each [remaining] floor will start at $185 per square foot annually, a source said, which are among the highest asking rents in any American office building ever. Average asking rent in Class A office space in midtown is $70 per square foot, according to the brokerage Cushman & Wakefield." The possibility of getting a 38% premium will certainly attract the attention of developers considering embarking on new projects.

A study made available today entitled "Responsible Property Investing: A Survey of American Executives" (available at http://www.uli.org/AM/Template.cfm?Section=Research&CONTENTFILEID=27159&TEMPLATE=/CM/ContentDisplay.cfm) explores the interest of REITs, developers, pension plans and other institutional investors in socially responsible property investing.

The study revealed that about 57% of survey respondents were implementing management strategies around conservation (promoting energy conservation, water conservation or recycling in your assets), and 36% were investing in Green Buildings. The sample size was small, only 189 respondents, but it reflects a growing interest among real estate investors in sustainable development.

The Importance Of Government Leadership

Happy 4th Of July! In honor of the founding of our nation's government, I would like to discuss the importance of government leadership in promoting green building. There are basically three ways in which the government can do it: 1) new laws; 2) new incentives and 3) investment of state/federal/local money in green building projects.

Passing new laws related to green building is the most obvious way that the government can promote green building. For example, earlier this spring Boston passed amendments to its zoning code to require all projects over 50,000 SF to be designed and planned to meet the “certified” level using the US Green Building Council’s Leadership in Energy and Environmental Design building rating system. New laws have both benefits for green building and some drawbacks. The major benefit is that the laws make adoptinng green building practices mandatory. In turn, this will lead to an increase in the use of green building practices and products, which will make them more accepted, available and reduce the cost. On the other hand, new laws comes with new challenges. If the laws are not well thought out, they can lead to dramatically adverse consequences. For example, Nevada passed a new tax incentive (more on these below), but later had to repeal it because it was so poorly drafted that it threatened the state budget. (I will write more on the Nevada debacle in a subsequent post, but for more information see http://www.lasvegassun.com/sunbin/stories/nevada/2007/may/02/050210067.html). Further, new laws are open to new interpretation and challenges at the administrative level and in the courts. The uncertainty this creates adds transaction costs to the green building endeavor. Despite these drawbacks, however, I believe that new green building regulations are necessary to create a tipping point where all construction incorporates green building practices, at least to some degree.

Incentives are another means for governments to incentivize specific behavior. This has been very popular--many states have created tax incentives for green building, and the federal government offers a variety of energy efficiency and renewable energy incentives as well. (For a good listing of state and federal programs, see http://www.dsireusa.org/index.cfm). Tax incentives use market forces to make green building practices more financially desireable. I think that there is certainly a benefit to these incentives, but, in speaking to several developers, if the deal is a good one, the tax incentives are not likely to factor into the analysis that significantly.

Finally, I want to discuss my personal favorite, government spending. Facilities now owned by the Federal Government are valued at over $300 billion. The Federal Government also spends over $25 billion per year for acquisition, renovation, and upkeep. If you add the state and municipal investment in facilities, its an enormous amount of resources, which can substantially influence the proliferation of green building practices and products.

Together, these three tools make government action vital to promoting green building practices, and I believe that the government will only become more influential in green building as the need and demand for environmental stewardship grows.

Proliferation of Standards

To date, the "platinum" standard for evaluating green construction has been the LEED performance rating system propogated by the United States Green Building Council (USGBC). (NOTE: I highly recommend the USGBC website, www.usgbc.org and the Delaware Valley local chapter www.dvgbc.org). However, there are a two standards available in draft form (and available for public comment) which add
new dimensions to the Green Building standard arena.

Of interest are two standards being developed by heavy hitters in the code world--ASHRAE Proposed Standard For The Design Of High-Performance Green Buildings Except Low-Rise Residential Buildings (available at http://www.ashrae.org/technology/page/331#july), and the International Code Council/National Association Of Home Builders National Green Building Standard (available at http://www.nahbrc.org/technical/standards/NGBS_Working_Draft_2007-03-22.pdf).

The ASHRAE standard is very similar to LEED, and was developed in conjunction with USGBC. The big distinction with the ASHRAE standard is that it is written for inclusion in municipal building codes, and includes a greater degree of detail and specificity than the LEED rating system.

The ICC/NAHB standard provides criteria for rating the environmental performance of
residential construction practices. Like the LEED standard, it allocates points towards a level--bronze, silver or gold--and provide criteria for earning the points.

I think that teaming with ASHRAE for the building code standard is a good pairing. Many of the LEED points already referenced ASHRAE standards to demonstrate compliance. In addition, to the extent that the slightly vague and amorphous LEED points can be honed to more specific requirements, it will be easier for local governments to adopt.

As for the ICC/NAHB standard, it appears to compete with the USGBC's LEED for Homes, which is currently in pilot version. It will be an interesting test case to see if the USGBC can retain its premier status as the regulator of green building, or whether other standards will become relevant for different kinds of construction.

The Role For Attorneys In Building Green

Green building has hit the real estate scene remarkably quickly, but little attention has been paid to the legal implications of this new area. As green building and ecological sustainability considerations are becoming more prevalent, new regulations are being enacted by local governments around the country and old regulations are being adapted to embrace green building practices. State, local and federal dollars are being made available for green building projects through tax incentives and grants. Insurance companies and financiers are making products and instruments for green building projects available. As a result, there are new legal issues to consider when embarking on a green building project, including: drafting construction and design contracts that incorporate green building standards; navigating the local building and zoning approvals processes and securing public financing; negotiating with insurance and financial institutions and resolving disputes over green building projects that fail to achieve their sustainability goals.

Green building projects large and small must obtain permits from local governments, but the regulatory environment is in flux. In many places the zoning and building codes were developed in response to the health and safety issues of a century ago, and certainly not developed with green building in mind. In others, due to lack of action on the federal level, local governments are creating new regulations to encourage sustainable development. As old regulations are being adapted to new technologies and new regulations are developed, attorneys can provide critical guidance on the local regulatory landscape as part of the planning for a green project.

Furthermore, private and government entities are providing significant financial incentives to encourage green building. For example, Gov. Edward G. Rendell's newly released energy independence strategy earmarks $150 million ($50 million for grants; $100 million for loans) for green building projects. Fireman's Fund offers discounted pricing for building owners who commit to greens standards, and provides specialized insurance to allow for repair or replacement of green building projects in the event of a loss. Lawyers have a unique role in identifying and securing access to financial incentives and risk management tools.

Participants in the development process will require new contracts to ensure compliance with green building goals. Most of the entities establishing criteria for the performance of green building are private, nonprofit organizations like the United States Green Building Council (USGBC). Many local regulations and incentives for green building are directly linked to these certifying criteria, particularly USGBC's Leadership in Energy and Environmental Design (LEED) standard. If a project must achieve a certain LEED or similar rating to qualify for funding or approval, the construction and design contracts should reflect that ambition.

Finally, although the green building movement is in its halcyon days, new expectations will inevitably lead to conflict. A multimillion-dollar development project will fail to gain the LEED credits required to secure a government grant, and litigation will doubtless ensue.

These are some of the legal considerations in building green. Considering the legal issues should not be seen as an impediment to green building, but rather as a way to manage risk and to proceed with a smooth development process.

Parts of this post were previously published in the Legal Intelligencer.

Welcome!

My name is Shari Shapiro, and I am an associate with the law firm of Obermayer Rebmann Maxwell & Hippel LLP in Philadelphia. I am a member of the Environmental and Litigation Departments, and I am spear-heading Obermayer's Green Building Initiative.

Obermayer has hosted several educational events, and I have published a number of articles on the legal issues concerning green building, but the information changes daily. The goal of this blog is to provide timely, in-depth information and to serve as a forum for discussions on this emerging area.

I hope you will find this blog both informative and entertaining.

Best,
Shari