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

In Part 3 of GBLB's green finance series (find Part 1 on Top 10 Rules of Green Finance here and Part 2 on Alternative Green Financing Mechanisms here), I will address government incentives and other programs.  I will also highlight some factors that may make green incentives go from rare bird to endangered species. 

As always,  I am not a finance professional, and the goal of these posts is simply to give a high-level overview of government incentives.  As with all financial decisions, please consult your financial professional and attorney for advice specific to your project. 

The Good News About Government Incentives

1. Programs are available at almost all levels of government--The Federal government offers grants, tax breaks, loan guarantees and technical assistance for green building and renewable energy components of commercial, residential and industrial projects.  The Office of Energy Efficiency and Renewable Energy has a pretty user friendly site. States also run incentive programs, and many states have renewable energy credit trading programs (also known as RECs or green tags or SRECs, etc.) which enable producers of renewable energy to get an extra stream of income from their property. For special groups, like Native American Tribes and Veterans, additional resources are available.
2. Some programs come from unusual sources--Not all green building and renewable energy incentives come from government.  Utilities sponsor a lot of programs for both commerical and residential projects (for example, see the programs available from PECO here).  Some non profits and even faith-based organizations are providing green incentives.  A loyal Twitter follower highlighted this program by the Jewish Free Loan Association (available to those of any faith) that provides interest free loans of up to $5000 for energy efficient upgrades for homes and small businesses in the Los Angeles area.
3. Don't neglect technical assistance programs-- One of the most underutilized incentive is technical assistance. Of course, homeowners and businesses can access technical assistance programs, but also municipalities, small businesses  and Native American Tribes can get thousands of dollars in technical assistance for free or reduced cost.  For example, in New York Con Edison provides small businesses with a free energy audit. This can ensure you maximize the benefit of your green project both environmentally and financially. 

And The Bad News

1. The new House is seeking to cut almost all Federal green incentives--According to Green Building Chronicle,The Republican Study Group, made up of more than 100 GOP House members, is targeting the wholesale elimination of funding for:

• Department of Energy Grants to States for Weatherization, $530 million annually;

• EPA’s Energy Star Program, $52 million annually; and

• federal office space acquisitions (which have helped the government build a market for LEED-certified buildings), $864 million annually.

Just to be clear, in a bill seeking $2.5 TRILLION in cuts, these total savings would account for .14% of the savings.

2. States and municipalities are strapped for cash--Like the Federal government, states and municipalities are strapped for cash, and may cut their green incentives to provide things like trash pick up and police.  
3. Some programs are not worth the effort to apply--All programs require paperwork, verification and in some cases, prevailing wage rates.  Sometimes the benefit is not worth the hassle.  
4. Some programs reward green bling rather than cost effective green improvements--Some programs reward the installation of renewable energy components or other "green bling" as opposed to better  insulation or new windows.  It is key to do a cost benefit analysis of any proposed green project to ensure that it has the greatest return on investment.

For more information, the DSIRE database of Federal and state renewable energy and energy efficiency programs is always useful, and be sure to check your state and local environmental departments and local utilities.

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I have written a lot about federal/local conflicts in green building regulation, particularly in regard to AHRI v. City of Albuquerque.  Today I want to address state law preemption--when state laws prohibit localities from regulating green.

A great example of this is in the Commonwealth of Pennsylvania where I practice law. 

In 2004, Pennsylvania adopted the Uniform Construction Code (UCC), a common building code for all municipalities in Pennsylvania. 

The UCC in itself does not prevent local governments from passing green building regulations related to the building code as long as:

• the requirements are equal to or more stringent than the UCC,
• the local government secures approval from Pennsylvania’s Department of Labor and Industry,
• the local government provides appropriate public notice

L&I provides a web overview of the requirements for making changes to the UCC here.

The legal requirements are Section 503(b-k) of Act 45, 403.102 of the UCC Regulation, both available at PA L&I website.

PA L&I will evaluate the proposed change based on the following criteria:
 
     (i) that certain clear and convincing local climatic, geologic,
     topographic or public health and safety circumstances or conditions
     justify the exception;
 
     (ii) the exception shall be adequate for the purpose intended and
     shall meet a standard of performance equal to or greater than that
     prescribed by the Uniform Construction Code;
 
     (iii) the exception would not diminish or threaten the health, safety
     and welfare of the public; and
 
     (iv) the exception would not be inconsistent with the legislative
     findings and purpose described in section 102

However, certain court decisions have made it questionable whether green building goals would satisfy the “clear and convincing” standard to justify the exception.  In Schuylkill Twp. v. Pa. Builders Ass'n, 935 A.2d 575 (Pa. Commw. Ct. 2007), the Commonwealth Court held that townships must prove that “the conditions there were so different from the statewide norm that the uniform standards were not appropriate to use in the Township,” in order to satisfy the “clear and convincing” standard for an exception to the UCC.  

This case is currently up on appeal before the Pennsylvania Supreme Court to determine whether the Pennsylvania law implementing the UCC requires a municipality to prove that there are unusual local circumstances or conditions atypical of other municipalities to justify an exception to the UCC.

If the Supreme Court determines that atypicality is required, local governments would have a very difficult time passing green building standards which required building practices different from those in the UCC--it would be very hard to argue that the benefits of green building any different in one township than any other in Pennsylvania.   

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