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

On Tuesday, Chris Christie (R) was elected as Governor of New Jersey.  His predecessor, Jon Corzine (D), instituted a number of programs through the state's administrative agencies to promote sustainable practices and green building.  So, what does this change in administration mean for green building in New Jersey, a leader among states in promoting green practices? 

Christie campaigned hard on issues like "controlling spending" and lowering New Jersey property taxes. He also proposed:

• Immediate freeze on proposed new agency rules and regulations.
• Sunset provisions for all new programs after 4 years. 

This will mean that anything in the pipeline of the administrative agencies will be frozen, and new green programs will be automatically sunsetted.

Christie seems to be pro-renewable energy, campaigning that he will:

• Renew NJ and the Choose New Jersey Energy Campaign. Consolidate all renewable energy manufacturing efforts and have New Jersey undergo a brand makeover to market and sell New Jersey’s resources to energy producers, innovators and developers.
• Incentivize energy manufacturing with tax credits. 100% of the corporate business taxes or the insurance premium tax for any wind turbine and manufacturing facility that locates in New Jersey.
• New Jersey will create higher-paying clean energy production jobs in the next four years. Commit to a 5/1 ratio of higher-paying, clean energy production jobs to lower paying, efficiency jobs. While New Jersey has one of the strongest renewable portfolio standards in the country, according to the US Energy Information Administration, the state actually ranks 43rd when it comes to generating renewable energy. 

The most interesting of these is "Commit to a 5/1 ratio of higher-paying, clean energy production jobs to lower paying, efficiency jobs." 

It is energy efficiency jobs which are predominantly blue collar, easy entry to work jobs.  And according to a recent McKinsey study, the economic and job vaue of energy efficiency has huge potential:

[B]etween 2009 and 2020, energy efficiency retrofits could generate between 500,000 and 750,000 direct, indirect and induced jobs through 2020.

Moreover, the low hanging fruit for energy savings and environmental stewardship--not to mention social equity--comes from energy efficiency, not renewable energy. According to the CleanTechies blog:

 A study done by a Lawrence Berkeley National Laboratory scientist claimed that commissioning all of the nation’s commercial buildings would yield the greatest energy savings per dollar spent of any option, including wind and solar energy production. Commissioning involves fine tuning a building’s existing energy systems to improve performance and eliminate wasteful energy use.

 Hopefully, a candidate who campaigned on the concept of fiscal responsibility will realize the value of investment in energy efficiency programs before putting all of New Jersey's eggs in the renewable energy incentive basket.  Stay tuned...

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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.  

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