Welcome LEED ND! We have some issues to discuss.

Yesterday, the USGBC launched LEED ND, the program for certifying neighborhoods as green in cooperation with the National Resources Defense Council (NRDC) and the Congress for the New Urbanism (CNU). I am a big fan of the concept of LEED ND, because (as I have discussed extensively on prior posts), a green building on an unsustainable site is not green.
According to CNU, LEED ND:

integrates the principles of new urbanism, green building, and smart growth into the first national standard for neighborhood design, expanding LEED's scope beyond individual buildings to a more holistic concern about the context of those buildings.

However, certifying neighborhoods automatically requires that the timeframe is much longer than that required for individual buildings, and may incorporate many different owners of different parcels and over the lifecycle of the project. According to the USGBC, LEED-ND projects will typically comprise of numerous buildings within a geographical area of up to 320 acres.
To address these issues, LEED ND has a different registration process. Projects are registered at three different stages of development:

Stage 1 – An application for Stage 1 may only be submitted for those projects that have achieved land use entitlement for no more than 50% of the square footage of all buildings within the project boundary, whether new or renovated, as measured on an aggregate basis.
Stage 2 – An application for Stage 2 may only be submitted for those projects that have achieved land use entitlement by public authorities with jurisdiction over the project for 100% of the square footage of all buildings within the project boundary, whether new or renovated. The project may be under construction or portions completed, but may not have more than 75% of its total building square footage constructed, whether new or renovated.
Stage 3 – An application for Stage 3 may only be submitted for those projects that are completed. A project is complete when: i) the appropriate regulatory authorities have issued certificates of occupancy (or other official designation that such facilities are fit and ready for use) for all buildings within the project and have accepted all infrastructure within the project; ii) every aspect of the project that pertains to a prerequisite has been completed; and iii) every aspect of the project that pertains to a credit that is being pursued has been completed.

At Stage 1 and Stage 2, GBCI will award an official designation to a project team rather than full certification. These official designations indicate that if a project is completed consistent with the information provided in the project application, then such completed project should satisfy all prerequisites and achieve a minimum number of points outlined in the LEED for Neighborhood Development rating system such that it should be eligible to receive LEED certification at a particular level, such as LEED Certified, LEED Silver, LEED Gold or LEED Platinum. At stage 1 a successful project team will be awarded “Conditional Approval of a LEED for Neighborhood Development Plan.” At stage 2 the project team is awarded a, “Pre-Certified LEED for Neighborhood Development Plan.”

This, of course, leads to a fundamental issue which vexes any land approvals process—what happens when the certification criteria change over time. With a standard land approval, like zoning, projects are generally subject to the laws that were in place when the project was submitted to the regulatory body. This is also how projects registered for LEED Certification have also been treated. Not so with LEED ND. According to the USGBC,

LEED-ND projects are not grandfathered to the rating system requirements in place at the time of initial registration…Under LEED-ND, projects can be registered a total of three times, once at the initiation of each stage. The rating system requirements are locked in for a particular stage at the point the project is registered for that stage rather than when it is registered at the initial stage.
So, you can begin a project under the requirements of LEED ND 2009, but be held to the standard of LEED ND 2018 when the project is ultimately completed.

I asked Susan Dorn, General Counsel for the USGBC about this “moving target” issue.

We are treating the registration for each stage independently. It is possible that people will not go beyond the first stage of registration, and likely in some instances. A lot of things happen with development on these long timelines. We also didn’t want the market to think that a project that was started 20 years ago was compliant with current LEED requirements. While the USGBC cannot commit, the issue of grandfathering will be something that we will keep in mind as the rating system develops. For 2012 the idea is that those persons that are working to develop LEED ND are aware of the issue, and there may be something akin to grandfathering.
Beyond whatever grandfathering may be built into subsequent versions of LEED ND, there is a section of the certification policy manual that addresses hardship. GBCI has some discretion with respect to credits which are impossible for a project to achieve. On the other hand USGBC doesn’t want to undermine the concept of LEED moving forward and mislead consumers. That is the tension.

I recommend that the USGBC develop a credit exemption process, by which LEED ND projects can demonstrate that complying with the as written requirement is impossible, and proposing an alternative. Since the timeframes are long and the projects are complex, some flexibility needs to be built into the system for it to be successful. No zoning code could exist without a mechanism for variance. This is what LEED ND needs going forward.

Nudging Towards Green Communities

I wrote last week about LEED-ND, the new USGBC product for creating sustainable neighborhoods.  LEED-ND and its predecessors like New Urbanism are private sector attempts to make sustainable, walkable communities more marketable. In theory, everyone should want to live in communities where services are readily available, where streetscapes are conducive to community building and where green spaces are an integrated part of the landscape. 

The reality has been more mixed. Mixed-use, well planned developments are more expensive to build, and often have difficult land approval processes which stretch out the development timeframe. There are criticisms about increased density, school costs and other issues. 

But, there is a policy mechanism which could be implemented to radically shift development patterns in the United States towards more sustainable communities without imposing external structures like LEED-ND or New Urbanism.  One of the sacred cows of tax policy in the United States is the mortgage interest tax deduction.  In most cases, all mortgage interest can be deducted from U.S. federal taxes.  What if the mortgage interest tax deduction were phased out for development on the periphery?  Development around transit nodes, in mixed use areas and in areas which are ripe for redevelopment (Camden?) could qualify for the deduction, development in ex-urban areas would not qualify, or qualify for a lower deduction.  Would this policy "nudge" work to transform our built environment and lead to the rapid development of sustainable communities? Is it even politically possible given the "sacred cow" nature of the mortgage interest deduction?     

Shining A Light On The LEED-ND Legal Bogeyman

LEED-ND is one of the newest members of the LEED family.  According to the USGBC,

The LEED for Neighborhood Development Rating System integrates the principles of smart growth, urbanism and green building into the first national system for neighborhood design.

Neighborhoods or communities apply to be LEED-ND certified, like buildings, and are evaluated by the USGBC and certified in a similar fashion. 

Sean Suder writes about alleged new legal issues arising with LEED-ND, the LEED product for Neighborhood Development.  According to Suder,

Those government planners and legislators currently responsible for imparting their value judgments will be forced to compete with those of the USGBC and the invisible hand of the market. Urban planning at the governmental level may become subordinated to these other forces.

In essence, Suder creates a bogeyman of a private entity setting standards for how neighborhoods are created and what rules people have to follow within them:  

The decisions made by the USGBC will not impact just one building, one developer or one tenant. Instead, LEED-ND has the potential to impact entire communities well beyond the development that is being certified. The USGBC has been charged to do so by the market, outside of the purview of elected officials or government planners and without any legal oversight or review.

If all Americans lived in traditional urban environments where zoning and land use decisions were made by government entities, I might agree with Suder's position.  But it has not been that way for 100 years.  Developers establish "communities" with standards for what color houses must be painted and how wide the driveways can be.  Enforcement of these decisions are then passed on to non-profit--but private--homeowners associations.  According to Evan Mackenzie, in his excellent book Privatopia, in 1960 there were fewer than 500 homeowners associations, by 1992 there were 150,000 homeowner associations governing the land use and property rights of 32 million Americans. Land use decisions and requirements have long been made by market-driven, private entities.  LEED-ND is nothing new in this regard.

LEED-ND is a development tool.  Developers will incorporate LEED-ND principles into their covenants and restrictions when creating LEED-ND communities, much as they have new urbanist principles.  Cities may also choose to adopt these principles, but the citizens will be protected by all of the due process requirements which inure when land use decisions are made by municipal governments.  Like the bogeyman in a child's closet once you shine a light on it, it disappears.