Throughout the Regulating Green series, I have tried to identify strategies which will lead to great green regulations.  I gave a presentation to municipalities in Southeastern PA who are considering green regulations.  In preparing for the presentation, I identified a few additional considerations for green regulations.  Here are some of the thoughts I shared: 

1. Avoid improper delegation of authority

Delegation of a power normally exercised by government authorities to a private agency is considered an improper delegation of authority.  Requiring green certification by a third party entity (like the USGBC) in order to get a Certificate of Occupancy would be subject to this challenge.  This challenge probably would not apply for incentive based programs or for municipalities' own buildings.
 

2. Develop a sound rational relationship between the regulatory means and the ends

In enacting land use regulations, the means a municipality uses to regulate must bear a a real and substantial relation to the ends sought.  Thus, green regulations should include a clear intent, be supported by external authority, and implement  rational regulatory mechanisms that tie to the original intent of the regulation.
 

3.  Ensure that your regulations are not void for vagueness

Regulations violate due process if a regulation fails to give a person of ordinary intelligence fair notice that contemplated conduct is forbidden or encourages arbitrary enforcement, or both.  Green regulations which include language like "LEED or equivalent standard" might not withstand a vagueness challenge.

4. Be careful of imposing arbitrary and excessive fees

If the cost of compliance with the regulation is too high, it may amount to a virtual taking of the property of the persons being regulated. This standard is high--the value of the property must be reduced to almost nothing for a taking to occur.  But, regulatory license fees must be reasonably related to the costs associated with the services being provided.  If a municipality imposes a fee for standard projects (i.e. projects which are not green), there could be a challenge that the license fees are not related to the services being provided.
 

• Email This
• Print
• Trackbacks
• Share Link

Guest post contributed by Holly McCarthy, who blogs at Organic Coupons. She invites your feedback at hollymccarthy12 at gmail dot com
 

Although the economy has taken a turn for the worse in recent months, one thing is for sure: the world will continue to see construction and development in all corners for many years to come. As the population continues to grow, new areas will need to be developed and old ones will need to be renovated or razed to make room to build up. At any rate, stricter laws must be enacted in the United States if we hope for the world to follow suit.

The US has gone through many building booms and continues to grow and develop in areas of highly concentrated populations. As we continue to build bigger and better we must keep in mind that uses sustainable resources and materials is the right way to go.

Plenty of products are now being developed and produced that will not leave a heavy carbon footprint or fail to decompose once put in a landfill. Recycled materials are being used and considered for use in a variety of building applications and energy efficiency is a key factor in the design of new buildings.

Cities and states have long made sure that builders and contractors are doing their part to maximize space without making a significant impact on the surrounding areas. It only makes sense that we look at the world through the same lens. Why would we want to build something—even if it’s beautiful—if it’s going to make a huge mess for someone else to clean up?

It is time to call for action regarding the production of building materials and enact laws that will make sustainability something that is finally considered when the blueprints are being drawn, not when the building is being scrapped.

Rejuvenation of cities is also possible through green roof initiatives, where owners of buildings are offered incentives for helping to reduce temperature and carbon dioxide levels in major cities by encouraging the growth and cultivation of ecosystems atop the large and small buildings. A simple solution can definitely yield some positive results.

Green building standards will one day be the norm; they are quickly becoming something that tenants and investors are looking for as well. Now all we need are the laws that will make what we know is that right to do mandatory.
 

• Email This
• Print
• Trackbacks
• Share Link

One of the primary considerations in regulating green in whether to incorporate a third party green building standard, like LEED, National Association of Home Builders Green, Green Globes, etc. into the regulations.  In addition to determining whether to include a third party standard, regulators must also consider which standard to use and whether to mandate certification.  There are pros and cons to each choice which regulators concerned about crafting great green regulations should carefully consider.

1. Third Party Standard, Proprietary Standard or Hybrid?

 There are three regulatory models currently being used to determine whether a project is "green".  One is to reference a third party standard like LEED or Green Globes--if a project meets LEED Silver criteria, it receives a 10% tax credit.  Another mechanism is to create proprietary green criteria--setting out targets for energy efficiency, water usage, etc.  Finally some government entities, like Boston, use a hybrid model, tacking on specific green targets on top of a third party rating system. 

The third party rating system is easy and inexpensive, but gives local regulators the least control.  What if the third party sets a requriement which is illegal or preempted? What if the third party sets a requirement which is inappropriate or impossible for your local conditions?

The proprietary system requires the most in house expertise.  The regulators in charge of setting the green targets must understand sustainability and legal drafting very well to make this work.  Also, the system must be updated to keep pace with the rapidly changing innovations in the green building industry. 

The hybrid model works well to include local considerations into the  green criteria, but does not solve the issue of lack of control over the rating system.

2. Which Third Party standard? 

The Leadership in Energy and Environmental Design (LEED) rating systems from the US Green Building Council, a non-profit organization, is the most common rating system incorporated into green regulations.   Energy Star, a government sponsored system, is also common.

Some regulations, in an attempt to be neutral, state that projects need to meet LEED "or equivalent" standard.   Which standard is equivalent to LEED may be difficult to determine, but NAHB Green and Green Globes are the likeliest candidates. Nonetheless, LEED is still the baseline against which the other standards are measured, so LEED becomes the de facto standard.  

3. Certification or no? 

Finally, local governments need to consider whether certification as "green" by a third party is a requirement of the regulatory scheme.  For example, many municipalities make access to tax credits contingent upon acheiving LEED certification.  For voluntary financial incentives, this is not as big of a legal pitfall, although the monetary and transaction costs association with certification may reduce the number of green projects being undertaken.  However, mandating certification by a private third party could run into legal hot water.  For example, the USGBC is under no legal obligation to certify buildings within a specified period of time, or at all.  If the developer could not get a certificate of occupancy without the certification, the developer might sue the city.  Municipalities have gotten around this by having projects submit third party rating system checklists for review by building officials, without requiring certification.  This requires adequate capacity for understanding the green building criteria within the relevant government entities.

• Email This
• Print
• Trackbacks
• Share Link

1.  Have a clear intent

In Going by the Book, authors Eugene Bardach and Robert Kagan state, “A regulation requirement is unreasonable if compliance would not yield the intended benefits…” In other words, a regulation should have a clear intent--like increasing the number of high performance buildings or reducing greenhouse gas emissions or improving indoor air quality--and compliance with the regulation should acheive the intent. 

2. Evaluate extreme outcomes

Las Vegas instituted a tax cut for green buildings so sweeping and easy to qualify for that it threatened to cut a giant hole in the state's budget.  In planning regulatory mechanisms, regulators must look at a likely scenario of compliance and an extreme case to ensure that all outcomes are considered, and the extreme case is prevented. 

3. Carefully analyze utilizing third party green building criteria and certification systems

Many local governments incorporate third party green building criteria (and in some cases, certification) like LEED, NAHB-Green, Green Globes, etc. as the core of their green building regulations.  I will do a full post on this topic as part of this series, but regulators need to examine the pros and cons of choosing a third party system as a component of their regulations.  

4. Create measurement and verfication mechanisms

In conjunction with point number 1 above, compliance with the regulations should be measurable and verifiable.  Looking to decrease greenhouse gas production? Require reporting on energy usage.  Looking to increase green buildings in your municipality? Require receipients of tax credits to indicate what green components the credit enables them to add that they would not have done in the absence of the credit. 

5. Develop valid enforcement mechanisms

Washington DC has come under major criticism for requiring a performance bond which is forfeited in the event that a building fails to comply with the green requirements of the DC green building act.  Essentially, this is not what a performance bond has traditionally been used for, and the surety industry has expressed significant concerns over providing bonds for this purpose.  Another mechanism DC could have used was to levy fines, or withdraw (or refuse to issue) occupancy permits, if the project did not meet its green requirements.  

6. Check for state and federal preemption 

Last year, the HVAC industry associations sued the City of Albuquerque to prevent the city's green building code from taking effect.  They argued that the energy efficiency requirements in the green building code was preempted by federal standards for HVAC equipment.  In the course of the litigation, it came out that the city attorney had not checked for federal preemption. 

In addition to federal standards, many states have state-wide building codes which may preempt local municipalities' ability to require construction to conform to more stringent standards.

7. Anticipate litigation

The first envrionmental legislation was passed in the early 1970s. There is still litigation on the interpretation of sections of the Clean Water Act and the Clean Air Act.  The purpose of the judiciary is to interpret and clarify regulations, and this process is a normal part of new regulatory schemes.

• Email This
• Print
• Trackbacks
• Share Link

In the past five years, green building regulation has been on a meteoric rise. Green practices are being incorporated into state an local building and zoning codes and ordinances. According to the AIA, 14% of US cities with populations in excess of 50,000 people now have green building programs in place, and the number of counties with green building programs has grown nearly 400% since 2003. In addition, federal statutes were passed requiring federal agencies to build green, procure recycled materials, reduce energy consumption and prevent pollution.  The regulatory schemes fall into one of three basic types: command-and-control regulations, financial incentives and non-financial incentives.  

Command and Control Regulations

These laws mandate that buildings comply with a green building standard of some type. Command and control regulations often reference a private green building standard, like LEED, but may also include local green building requirements on top of the referenced standard.

Command and control regulations come in two basic types, zoning ordinances and building code changes. One model for instituting a command-and-control regulation is to pass a zoning ordinance which requires that a proposed project meet the referenced green building standard, in order to obtain zoning.

 In 2007, Boston made several amendments to the Boston Zoning Code to require all projects over 50,000 SF to be designed and planned to meet the “certified” level using the USGBC’s LEED systems modified with Boston-specific credits.

The advantage of a zoning code based regulation is that the project team can determine how to achieve the green building standard. In addition, local governments have almost exclusive control over their zoning.

Another approach is to revise the building code to require green building practices. On July 17, 2008, California adopted a green building code applying to all new construction statewide, with targets for energy efficiency, water consumption, plumbing systems, diversion of construction waste and use of environmentally sensitive materials in construction and design. 

 Some advantages to amending the building code to include green building requirements is that more buildings are generally impacted by changes to the building code, and the system of inspection for compliance with building codes is already in place.

Financial Incentives

Municipalities can also provide financial incentives to promote green building practices. These financial incentives can take almost any form: tax rebates, fee waivers, cash payments, etc. 

Portland, OR recently instituted a unique “feebate” structure whereby buildings built in a conventional manner pay a specified fee for their permits, building s built to LEED Silver standard get the fees waived and get access to green building resources, and buildings built to LEED Gold or higher actually get a rebate from the government. 

The advantage to financial incentives is that they use the market to encourage green building, as opposed to mandating green building practices.  However, there has been little data collected regarding whether financial incentives cause developers to go green where they would not have otherwise.  In other words, the value of the financial incentives in stimulating new green building projects has not been adequately studied.  

Non-Financial Incentives

The third common type of green building regulation is the non-financial incentive. Some local governments allow for increases in floor to area ratio, building height or density for building green. Others expedite the permitting process. 

Using non-financial incentives has the advantage of being inexpensive for cash-strapped local governments, and harnessing some of the same market based value of financial incentives.  It is also a good gateway for entry into regulating green buildings for local governments who want to proceed in a step-by-step fashion.

TOMORROW: To LEED or Not To LEED: Pros and Cons Of Integrating Third Party Certification Into Green Building Regulations

• Email This
• Print
• Trackbacks
• Share Link

Today I will introduce the first of a new series on Green Building Law Blog focusing on mechanisms for regulating green building successfully.  This series incorporates many themes I have been covering here on Green Building Law, but is intended to be a more in depth look at the topic.  

Please feel free to contact me with any comments or suggestions for the series at shari.shapiro@obermayer.com.

• Email This
• Print
• Trackbacks
• Share Link

This week, I posted an online conversation with James Bedell and Chris Hill about the stimulus package.

On Friday, we sat down and had a lively debate on KCast, a podcast brought to you by Konstructr, the social network for the building industry brought to you by one of the brightest lights in the online work, Vik Duggal.

You can access the podcast here.

• Email This
• Print
• Trackbacks
• Share Link

Paul Krugman, my absolute fave, had a very insightful piece on how the centrists killed the efficacy of the stimulus package.  He comes at it from a more economic, and less environmental, standpoint, but arrives at the same conclusion I did.  

My friend Chris Hill over at Construction Law Musings commented directly on James Bedell and my dialogue from yesterday.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

Guest Post: Seth Shapiro, Director of Planning and Urban Design, Barton Partners

So, just as green building approaches mainstream acceptance, the economy tanks. Does this mean that the environment will once again have to take a back seat?  The answer is an emphatic no.   While the building construction and development industries are indeed in for some pain (for those who peddled unsustainable development, deservedly so) the current downturn provides for an opportunity to address some land planning and urban design issues, especially as they relate to sustainable design.

I have often been skeptical of green building as a panacea, especially independent of specific land use policy reform. Selling a building as “green”, even as it continues the development patterns associated with sprawl, is utterly ridiculous. With the release of LEED ND, the USGBC goes a long way in addressing this issue. But I wonder if it goes far enough. What if no building could be LEED certified (Homes, NC, Retail, etc) if it did not achieve at least a minimum of a LEED ND certification as a perquisite?

Clearly, this pause in building activity is the right time to address how we can redevelop the sub- and ex-urbs in a more sustainable fashion. Thankfully, this is exactly what seems to be occurring, independent of any greatly needed government stimulus or public policy shift.

At BartonPartners, where I serve as the Director of Planning and Urban Design, the projects that are making their way to my desk almost exclusively involve repositioning conventionally designed suburban projects for a more sustainable, and often mixed use future (usually independent of existing zoning regulations). Whether these projects eventually achieve a LEED certification or another green building designation is somewhat irrelevant as they, by there very location within already developed areas and often adjacent to transit infrastructure, are being repositioned in more sustainable patterns for future markets.

Indeed, the smartest of our developer clients are investing small sums of money now in specific project planning and urban design studies. In today’s environment, entitlement may be 12 to 18 months down the road anyway, especially in more established communities. While full architectural services are out of reach for many developers and property owners in this economic climate, up front urban design services, which are a fraction of standard architectural fees, can go a long way to position the smart projects for the future upturn in real estate, whether that be in early 2010 or (sigh) beyond.  

• Email This
• Print
• Trackbacks
• Share Link

Thanks so much to James Bedell for his thoughtful response to my Senate stimulus package  piece.  You make the point:

Perhaps we should take the president at his word. That the primary purpose of this bill is to get people to work, to stimulate demand in the economy and break the downward trend. Not fulfill the agenda of the liberal left in one massive bill passed within 3 weeks of taking office.

My difficulty is that once you have passed a $1 trillion (there, I said it, everybody ok?) stimulus package, there will be little capital--fiscal or political--left over to apply to other projects.  Obama will have essentially spent all of his favors passing the stimulus package, and not be able to get solid legislation through on energy efficiency, green building codes, etc.

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link

Yesterday, I posted a piece on the Senate stimulus package, arguing that it failed to provide the green basis for a thriving future economy. 

James Bedell, one of my Twitter buddies (he is @jamesbedell, and you should be following him if you are a tweeter) wrote this thoughtful response on Konstructr. 

Read the rest of James' post on Konstructr

• Email This
• Print
• Trackbacks
• Share Link

The Senate is proposing to give the United States a bandaid, when a transplant is required.

I was disappointed when the House’s version of the Stimulus Package was released with only $95 billion allocated to green initiatives out of $550 billion in expenditures (and another $275 billion in tax cuts), but the Senate version is far worse. By my reading, only $67.2 billion of the $885 billion Senate stimulus plan is now allocated for green initiatives:

Instead of a down payment on our future, the Senate bill sprinkles most of the stimulus money throughout the existing economy, with $13.9 billion in Pell Higher Education grants, $13 billion "to help close the achievement gap and enable disadvantaged students to reach their potential," $5.8 billion to "fight preventable diseases and conditions." Some money is clearly not green at all—like $27 billion in highway funding.

There are also major bucks for residential real estate proposed. According to CNN, Senate Budget Committee Chairman Kent Conrad, D-N.D., said he would propose an expansion of a temporary $7,500 first-time home buyer credit so that it applies to all purchases of primary residences, and some Republican senators have called for an increase in the credit to $15,000. Senate Republicans are likely to introduce a provision that would encourage lenders to offer a 30-year fixed rate mortgage at 4%.

The problem with the stimulus package and the proposed amendments is not the amount of the allocations, or even the worthiness of some of the programs, like higher education and healthcare. Rather, it is the fundamental perspective on the American economy that it represents.

Read the rest of this article at Greenerbuildings.com

• Email This
• Print
• Comments (2)
• Trackbacks (1)
• Share Link

On Wednesday, I was fortunate to attend the forum "Sustainable Energy: From Global Evolution to Local Execution" hosted by the World Trade Center of Greater Philadelphia.  I expected to come away with greater knowledge about local renewable energy initiatives in the Delaware Valley, which I did.  There were great presentations by Pennsylvania and New Jersey officials on the state's energy plans, which I will go into more detail about in a later post.  But what was far more interesting to me was the clever strategies that companies are using to promote green during the economic downturn.

John Gattuso, Senior Vice President of Liberty Property Trust, spoke about what Liberty (one of the leaders in green development on both the office and industrial side) was doing during the downturn:

Right now, we are looking at what the next set of buildings are going to look like.  People have the time to think and plan now.

Smart developers are using this time to plan their next projects.  It takes 12-18 months at least to get projects into the ground through land acquisition, approvals, design, etc.  Now is the time to be engaging urban designers and sustainable architects (not to mention land use attorneys) to create the next great places to live and work. If you wait until the downturn is over, you will be at the back of the pack, not the front.

David Stangis, the Vice President of Corporate and Social Responsibility for Campbell's Soup (headquartered in scenic Camden, NJ) spoke about the importance of honing the green business case. 

Where the business case makes sense in where change will happen.  Businesses are looking for the sweet spot in having sustainability initiatives make business sense.

Smart green companies, regulators and advocates need to use the downturn to hone the business case for sustainability.  Projects which were on the bubble in the boom times will not fly. in what I like to call the "money constrained economy." Energy efficiency, reducing travel, using fewer resources and collaboratively creating new value will. 

• Email This
• Print
• Trackbacks
• Share Link

I was featured in the ABA Journal in an article on green suits, including Shaw Development v. Southern Builders and AHRI v. City of Albuquerque.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

The Department of Energy has a map which identifies the Building Code Energy Codes for each state, along with the ASHRAE energy code standard they are currently using. 

• Email This
• Print
• Trackbacks
• Share Link

There has been a lot of discussion about whether the stimulus package includes too much pork, unnecessary spending, etc.  Obama has countered that the bill may not be perfect, but we have to do something.  In short, the country has come up against an age old problem--are we letting the great be the enemy of the good? Do we need to do something, however flawed? 

I engaged in a similar conversation with respect to green building regulation at the William and Mary Environmental Law and Policy Review symposium this past weekend. One of the speakers, Carl Circo, a professor at the University of Arkansas and self-proclaimed "Green Building Pessimist" argued that the green building regulations were insufficient to address the environmental and social problems plaguing us today.

We are indeed using blunt regulatory instruments, like impact fees which may not show the requisite connection between development and environmental damage, LEED-referencing legislation which may not effectively limit energy and water usage, etc.  Unlike the stimulus package, where spending is a one shot deal, with green building regulation, acting is preferable to not acting.  We will achieve three significant goals by passing green regulations,  though they be subject to critical challenges, even litigation: 

1. Obtain whatever environmental benefits come as a result of the regulation--requiring LEED compliance or fees for building conventionally will not set us back environmentally, and we may make incremental progress

2. Provide a basis for measurement, evaluation and tweaking  

3. Provide a working draft for uniform federal legislation (which I believe is coming)

So to municipalities who are considering legislating green, I recommend taking the plunge.  There is no such thing as perfect legislation, and the carbon crisis does not give us the luxury of time.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

The Kresge Foundation has added sustainable design planning grants from $50,000-$100,000 to its roster of resources available to non-profits.  The grants are for:

Professional services to facilitate the design planning meetings or charrettes during the pre-design period.  Planning grants are available to cover the following costs: 

• Energy analysis and modeling

• Water use analysis and modeling

• Ecological site planning

• Commissioning expenses associated with the planning process

• Initial documentation and LEED registration with the U.S. Green Building Council

Eligible entities: 

501(c)(3) organizations that are not classified as private foundations

Government entities

Community colleges, colleges and universities that are fully accredited associate, baccalaureate and/or graduate degree-granting institutions

Elementary and secondary schools that serve predominately students with physical and/or developmental disabilities

Hospitals that are accredited by the Joint Commission on Accreditation of Healthcare Organizations

Religious organizations that are operated by or within religious institutions and serve secular needs, have space formally dedicated to their programs, and have financial and governing autonomy from the parent religious organization

Canadian organizations that would qualify as charitable organizations under United States law and have an independent audit prepared in accordance with their recognized local standards
 

This is a great program.  What I would like to see developed, though, is a green building policy institute--a think tank for green building policy. 

• Email This
• Print
• Trackbacks
• Share Link

On Saturday, I spoke at the truly excellent seminar on green building law and policy "It's Not Easy Building Green" put on by the William & Mary Environmental Law and Policy Review Symposium.  Notes on my presentation and others are available here.

Among the topics discussed was the outcome of the Las Vegas tax credit for green buildings which I first posted on in July 2007. 

In short, Las Vegas passed a tax incentive for green buildings in 2005 -- 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.
 

According to Darren Prum, one of the presenters at the ELPR Symposium, developers soon realized that they would receive up to $3 back for every $1 they spent building green, and applied the tax breaks to construction equipment and other ancillary purchases.  Soon, the  green incentive was slated to cost the state $940 million in revenue over the next decade, and threatened the budget of the state of Nevada. 

To escape the budget crisis, a new bill was passsed which lowered the property tax reductions, and limited the abatement to 10 years.  School taxes were also exempted from the abatement, and sticrt anti-smoking provisions were incorporated. Six projects were grandfathered in.  According to Prum, the reduced price tag of the revised abatement was $493 million. 

Like the famous architecture book which inspired the title of this post, there is much that we can learn from the unique character of Las Vegas, especially as Obama tries to put together green incentives as part of the stimulus package.  Here are some teachings from Las Vegas' initial failed attempt at encouraging green building:

1. Proportionaility is key: Ideally, an incentive should be only $1 over the price which makes the project economically desireable.  If a project is already economically desireable, a financial incentive is not the right tool.

2. Green should be green: Although we should not let the great be the enemy of the good, a green project should have to meet the basic components of energy efficiency, water conservation, sustainable site, indoor air quality, and renewable materials and resources. 

3. Regulatory experimentation will not be without failure: Counties with green regulatory schemes have increased 400% since 2003.  With such a great increase in regulation, there will be failures like Las Vegas, and litigation.  This is part of new regulatory regimes, and is to be expected.  

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link