Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

For several years, property owners have become increasingly aware of the potential for energy efficient buildings to decrease operating costs, improve occupancy, and demand higher rental prices.

Theoretically, all of the benefits of energy efficient buildings should yield a higher property values for green buildings and lower values for non-energy efficient buildings.  However, real estate appraisers often fail to properly value the energy efficiency features, meaning that the building will be appraised for the same value as another building without the investment in energy efficient systems, features, etc.   

 If energy efficient properties are appraised below their actual value, it can lead to a reduced resale value, lower rents, and poorer financing options than the owner would realize if the appraisal took into account the value of the property’s green attributes.

On August 8, 2011, the Department of Energy issued a "Request for Information" seeking input from stakeholders on a "Commercial Building Asset Rating Program"--let's call it "Highrise Star."  The goal of Highrise Star is to create an Energy Star-like system for commercial buildings.  The program would establish common inputs for calculating energy efficiency, select a modeling tool to evaluate the inputs for individual buildings and output a rating with which to compare the energy efficiency of different buildings.

The goal of the new program is primarily to address the issue of valuing energy efficiency (it does not address other green features like water usage, etc.) discussed above by providing a common metric for comparing the energy efficiency of commercial properties, and providing a reliable and common system for evaluating commercial building energy efficiency. 

The devil is in the details, of course.  The RFI proposes several different models for valuing energy, evaluating energy efficiency, and conveying the information.  If the DOE program is created, the commerical real estate community could soon be using a 100 point scale, like LEED, or a star system like the Energy Guide labels on appliances.  The robustness of the inputs and the energy model is critical to accurately evaluating building energy use, the simplicity of the input system will determine whether commercial building owners will use it to rate their facilities, and the representation of the "score" will determine whether users will actually understand and act on the information.

Many will ask "Where does this leave LEED?"  The proposed commercial building program is much less ambitious than LEED, in that it focuses exclusively on energy use. However, if every building has a "[High]rise Star," commercial building owners may be less likely to seek LEED to verify the green-ness of the facility.  Since Highrise Star will be free, the incentive to invest in LEED may be significantly reduced.  The ultimate test will be one of reliability--if Highrise Star is seen as robust, reliable and easy to use, LEED will have its work cut out for it to compete.  If it is viewed as too "easy" to achieve high marks for energy efficiency or if the interface is too cumbersome, then LEED will not be so directly effected.   

In any event, since government programs are often VERY slow to be developed, it may be a while before [High]rise Star comes on line.

• Email This
• Print
• Trackbacks
• Share Link

There is a corner of the Federal government that, unless you are as data obsessed as I am, you never knew existed.  For the part 25 years, the Energy Information Administration (EIA) has collected  baseline data on commercial building energy usage, known as CBECS.  CBECS is the only government source of statistical data for energy consumption and related characteristics of commercial buildings.   The data EIA has collected forms the underlying data for programs like Energy Star and LEED, and laws like Energy Independence and Security Act of 2007 (EISA 2007).

Two pieces of bad news were released today.  First, the EIA tried to cut costs by contracting out its building energy information gathering.  Unfortunately, the data gathered by its contractor was so shoddy that the EIA is refusing to release the data. 

According to a press release from the EIA:

EIA regrets to report that the 2007 Commercial Buildings Energy Consumption Survey (CBECS) has not yielded valid statistical estimates of building counts, energy characteristics, consumption, and expenditures. Because the data do not meet EIA standards for quality, credible energy information, neither data tables nor a public use file will be released.

Worse still, according to the EIA, the budget cuts made in this year's budget negotiations have reduced the EIA budget so severely that it will suspend collection of 2011 data.  In other words, the best building data we have to work with at this point is almost 10 years old, and no further data is being collected. 

Because approximately 30% of all energy is used by buildings, without a good baseline assessment of current building energy use, it will be difficult to:

1. Accurately benchmark current building performance; and
2. Accurately model building energy efficiency efforts. 

If energy models are based on bad or old or unreliable data, the results in practice may not live up to the predictions, and it will be easier to dismiss efforts to comprehensively transform building energy usage.  In other words, garbage in, garbage out.   

To address this situation, there are two choices. 

 A relatively unbiased private organization, like ASHRAE or the International Code Council, could collect the data.  Although the standard setting organizations will have their own internal and external customers to serve, and questions will inevitably arise as to the bias and validity of the data, they possess the relevant expertise and are currently relied upon to provide input into laws (like building codes).  The other option is for the Department of Energy or other government agency to recognize data gathering as a priority, and reallocate funds for the purpose of building energy efficiency data collection. 

In any event, a reliable party must step up to fill the data void, or future efforts to actualize the most cost effective method of reducing energy use and greenhouse gases will be squandered.  We will pay now through unnecessarily high energy costs and the price tag for participating in conflicts in the Middle East, and future generations will pay for damage to the environment.  Garbage in, garbage out. 

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

A lot of attention has been paid to creating a greener building stock by incorporating green building practices into building codes.  The development of the International Green Construction Code is just one example.

However, there are two primary components to every regulation--policy and process.  Both components are critical to acheiving regulatory goals. Good laws that are not implemented and enforced might as well not exist, and bad laws which are well implemented create a different, but equally bad, outcome. 

The process for approving building codes is arcane at best and impenetrable at worst. To those interested in sustainability, code process may seem like the ultimate "inside baseball" information, like knowing what the Lou Brock's 1967 out statistic was--simply not vital to understanding baseball as a whole.  HB 377, a law signed by Pennsylvania Governor Tom Corbett this week demonstrates how how process changes can impact green building and energy efficiency policy. 

 Generally, the process for adopting building codes is as follows:

1.  The local or state government enacts enabling legislation requiring a building code, often incorporating the International Code Council's model code.  

2.  The International Code Council updates their model building codes on a regular basis, once every three years.

3.  The state or local government has some mechanism, either automatic or through an approval process, for updating its building code to the new version. 

Depending on what level of authority is provided to local governments with respect to their building codes, local governments may adopt additional or different changes to the building code requirements.

Pennsylvania has a state wide building code which, until this week, was an "opt-out" model.  Updates to the International Construction Code were automatically incorporated into the Pennsylvania code unless provisions were specifically rejected by a Governnor-appointed council comprised of builders, architects, code officials and so on. 

The bill enacted this week switches the code adoption to an "opt-in" model.  Any changes to the construction code must be approved by a super-majority vote by the council, otherwise the prior code remains in effect.  In addition, the law adds an additional seat to the 19 member council for:

A GENERAL CONTRACTOR FROM AN ASSOCIATION REPRESENTING THE NONRESIDENTIAL CONSTRUCTION INDUSTRY WHO HAS RECOGNIZED ABILITY AND EXPERIENCE IN THE CONSTRUCTION OF NONRESIDENTIAL BUILDINGS

Policy watchers, like Penn Future , the Delaware Valley Green Building Council, and the Northeast Energy Efficiency Partnerships , anticipate that the super-majority vote of the council will make enacting updates of the ICC very difficult, and that the extra seat for the general contractor will bias the council against upgrading the stringency of the building code. This, of course, includes code changes for greater energy efficiency requirements and incorporating green building practices.

HB 377 said nothing about energy efficiency or green building.  Nonetheless, the changes to the building code adoption process creates a potentially significant barrier to a greener building stock in Pennsylvania.  On a 20 person board, It would require 13 votes to put a code change into effect, and each change must be lobbied for separately.  

Do you know what the code adoption process is in your state or municipality?  Are there any proposed changes?  Let GBLB know what you find out.  It might surprise you.    

• Email This
• Print
• Comments (5)
• Trackbacks
• Share Link

On Friday, the USGBC responded to Henry Gifford's amended complaint with a Motion To Dismiss for failure to state a legal claim (Federal Rule of Civil Procedure 12(b)(6)) and for lack of subject matter jurisdiction (Federal Rule of Civil Procedure 12(b)(1)).

In essence, the USGBC's response has two prongs: 1) the Plaintiffs lack standing, as I predicted here; and 2) that the Plaintiffs could not demonstrate that they had been harmed by the USGBC's allegedly illegal conduct. Stephen Del Percio does a nice job of outlining the standing arguments here. 

In the back of the Memorandum of Law is an interesting discussion of the USGBC's marketing.  In the context of arguing that the New York Consumer Fraud Statute does not apply, the USGBC argues:

USGBC's marketing--which is before this Court on this motion--is directed at businesses and professionals.  The website, which is how USGBC advertises, defines the audience for USGBC's marketing.  LEED users are 'architects, real estate professionals, facility managers engineers, interior designers, landscape architects, construction managers, lenders and government officials...

I think this is a difficult argument, and not one with a lot of factual merit. 

The USGBC website has a link to a website entitled:

U.S. Green Building Council's Green Home Guide Connecting you to ideas, advice and green home professionals.

The purpose of the site is clearly to communicate information about LEED and green building directly to consumer homeowners. The Green Home Guide website offers a tool for homeowners to become acquainted with the LEED for Homes system:

LEED FOR HOMES SCORING TOOL
It's FREE.NEW – The LEED for Homes Scoring Tool

Q: How close is your project to earning
LEED for Homes certification?

A: Probably much closer than you think.

As the building industry evolves, more residential projects already include sustainable features that contribute to certification. The LEED for Homes Scoring Tool will help you assess your project. By answering a few simple questions, you’ll not only learn just how close you are to earning certification, but also various steps you might take to get there. Plus you’ll gain important insight on the LEED for Homes rating system.
 

The USGBC even publishes a brochure for LEED® for Homes™ FAQ for Homeowners available here.

So, it's pretty clear that the USGBC is marketing directly to consumers, contrary to the Memorandum of Law in support of the USGBC's Motion to Dismiss.

The worst part is that there was no need for the USGBC to make this factually unsupported argument. Even if the USGBC advertises to consumers, the consumers that might have been harmed by the advertisement are not included amongst the plaintiffs, and are not represented by the factual misstatements alleged in the Amended Complaint. Making factually unsupported arguments may weaken the punch of the USGBC's clearer grounds for dismissal, and provide a toe hold for the Plaintiffs to plant seeds of doubt about the rest of the USGBC's arguments.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

Today, my co-conspirator and green building blog buddy over at Green Building Law Update criticized a post I wrote a few weeks back on Wisconsin governor Jim Doyle vetoing a green building bill that mandated 15% of gross square footage of state space to be LEED certified.  The essence of Chris' piece is that

The Governor properly vetoed spending state funds to certify public buildings as green.

Except, that's not why he vetoed the bill.  He vetoed it because it requires all moneys available for use by the building commission to be devoted to making state buildings green.

In his letter to the senate he stated:

[The requirement that all moneys be used for greening buildings] will result in all current maintenance projects being delayed indefinitely.  In the future, the commitment of all these funds for this single purpose will also sharply curtain the state's ability to build new building or maintain its existing facilities. 

In short, he vetoed it because it was too expensive and that money should be used for building new, non-green facilities or repairing old ones in a non-green manner.

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

What a difference the pond makes. 

The E.U. passed strict energy efficiency regulations Tuesday, requiring all new buildings constructed in Europe after 2020 to be virtually carbon-neutral.  The goal, according to Reuters, is to reduce the 36% of GHG emissions attributable to Europe's building stock:

"With buildings accounting for 36 percent of the EU's greenhouse gases, improving their energy efficiency is also crucial for meeting the EU's climate change goals," said Turmes.

Contrast this approach to yesterday's veto by Wisconsin's governor of a bill aimed at making a percentage of public buildings green. The Milwaukee Journal-Sentinel reported:

The measure had directed all state building funds to be used for certifying at least 15% of total gross square footage of working space in state-owned and leased buildings to meet green building requirements.

The reason for the veto? In a letter, Governor Doyle stated that the requirement would:

[R]esult in all current maintenance projects being delayed indefinitely.  In the future, the commitment of all these funds for this single purpose will also sharply curtail the state's ability to build new buildings or maintain its existing facilities. 

I find it difficult to reconcile these two regulatory actions.  On the one hand, Europe has determined that it is not only feasible, but necessary to build its entire building stock to a near carbon neutral level, and Wisconsin has determined that it cannot even make 15% of its public buildings green.  What will the competitiveness of Wisconsin--indeed, the entire United States--be if it is saddled with a portfolio of underperforming building stock contributing to greenhouse gas emissions.

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

On Earth Day, Mayor Bloomberg announced sweeping new green building regulations for New York City.  The proposed regulations would: 

• mandate energy audits in buildings larger than 50,000 square feet once every decade and require retrofits that are deemed cost effective, which is defined as a five-year payback period
• require property owners to benchmark the energy usage of their buildings
• mandate commercial lighting upgrades by 2022
• require compliance with a new energy code after completing a building renovation of any size

On May 12, the Massachusetts Board of Building Regulations and Standards (BBRS) approved Appendix 120AA as an optional appendix to the 7th edition Massachusetts Building Code 780 CMR. According to the BBRS,

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

Opponents argue

The “stretch code”...will end decades of statewide uniformity under the existing building code and will be in direct conflict with the goals of the statewide code — to provide uniformity, predictability and clarity.

These sweeping regulations are interesting from a couple of different perspectives.  First, they indicate a political willingness to impose stricter--and potentially costlier--regulations on developers, despite the down real estate market.  Second, they indicate a shift in policy making from independent green regulatins to adaptations of the building and energy codes.  It will be interesting to see how these schemes are implemented, and what effect they have on development in these localities. 

• Email This
• Print
• Trackbacks
• Share Link

Change.gov, Obama's transition site, had a message from the President-Elect today about his plan for economic recovery. Top of his list was greening federal building stock:

First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won't just save you, the American taxpayer, billions of dollars each year. It will put people back to work.

Interesting that green building infrastructure for the federal government is the first component in Obama's plan.

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

Recently, I wrote at Greenerbuildings.com about how legal issues have largly been ignored by the USGBC.  I first posted an article about the legal considerations for green buildings in July 2007.  Below is an update to that article.

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.

• Email This
• Print
• Comments (4)
• Trackbacks
• Share Link