Environmental concerns have significantly impacted the face of today’s construction industry. As recently as thirty years ago such concerns may have invoked little more than thoughts of rain at the jobsite. Today however, such concerns are truly business concerns, of which a prudent contractor, supplier, owner, and their attorney, must be aware. From land use restrictions and disposal mandates, to tax credits and insurance coverage, the environmentally-related considerations affecting today’s business environment are numerous and continuously evolving.
This article addresses the recently evolving impact of environmental concerns on building requirements. Specifically, this article addresses so-called “green building” requirements.
Though passing familiarity with the term “green building” is presumed, an exact definition for the term is not. Accordingly, for the purposes of this article, green building is the claimed practice of: 1. increasing the efficiency with which buildings and their sites use and obtain energy, water, and materials; and, 2. reducing building impacts on human health and the environment, through better siting, design, construction, operation, maintenance, and removal.
Proponents argue that the practice of green building leads to such benefits as reduced operating costs (by using less energy and water), improved public and occupant health (due to improved indoor air quality), and reduced environmental impacts (by utilizing less natural resources, lessening storm water runoff and lessening the “heat-islands” associated with urban environments).
Surely, few readers of this article will disagree that the above human and environmental byproducts of green building, if realized, are indeed benefits to the community. Equally as sure however, is that the actions necessary to realize the claimed benefits will not be collectively taken unless: 1. mandatory or, 2. such actions improve a business’ profitability.
First addressing profitability, while implementation of certain green building designs or materials may increase total project cost by one to seven percent (1-7%), the technological advances incorporated by way of green building have proven to strengthen a business’ bottom line. In fact, a recent study conducted for the State of California concluded that, on average, green buildings deliver a return on investment ten times the additional costs associated with green building. Accordingly, from advances in energy efficiency to cost reductions associated with recycling, it is inevitable that the implementation of certain green building techniques will benefit contractors, suppliers and owners. Increasingly however, regardless of profitability, the implementation of green building techniques by a contractor, supplier and even owner, will not be voluntary, but rather mandatory.
An example of the shift toward mandatory green building is Local Law of the City of New York for the Year 2005 No. 86, also known as the “LEED Law” or “Local Law 86”, which takes effect on January 1, 2007. Under Local Law 86, New York City’s capital projects, as well as private capital projects receiving city funding, must meet certain green building standards contained in the United States Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) standards.
Local Law 86 will apply to those capital improvement projects which involve the construction and/or rehabilitation of a building where the total anticipated costs of the improvement exceed $2 million; installation or replacement of a boiler or HVAC system projects which exceed $2 million; installation or replacement of lighting systems projects which exceed $1 million; and, installation or replacement of plumbing systems projects which exceed $500,000.00.
With regard to private sector projects, Local Law 86 will apply where the project receives a minimum of $10 million or fifty percent (50%) of the estimated project cost from the City treasury.
Considering the anticipated $12 billion effect on construction of Local Law 86 over the City’s ten-year capital plan, it is clear that the Local Law 86 will have a major impact in promoting green design and building techniques throughout New York’s construction industry. Moreover, it is equally clear that Local Law 86 will competitively favor those contractors, suppliers and owners familiar with the LEED standards.
Accordingly, for those attorneys with clients who are contractors, suppliers and/or owners, familiarity with the LEED standards is necessary. Under the standards, four levels of certification exist, described as either “Certified”, “Silver”, “Gold” or “Platinum.” The rating level is determined by the number of points the project receives under a checklist developed by the U.S. Green Building Counsel. In order to achieve a “Certified” rating, a project must score between 26-32 points; for Silver, between 33-38 points; for Gold, 39-51 points; and for Platinum, between 52-69 points.
The points are linked to such categories as “Sustainability”, “Water Efficiency”, “Energy and Atmosphere”, “Materials and Resources”, “Indoor Environmental Quality” and “Innovation and Design Process.” While the ultimate receipt of certification is the responsibility of the project architect, engineer or other LEED specialist assigned to the project, clearly, the contractor or supplier who can provide a “greener” service and/or product is in the best position to outperform the competition.
Those contractors, suppliers and owners outside of New York City believing that the LEED standards will not affect them should reconsider. Numerous municipalities have either already enacted green building requirements, or are in the process of enacting such requirements. Examples of municipalities that have adopted LEED, or have otherwise required that city-owned buildings be built according to green building criteria, include Atlanta, Austin, Boston, Boulder, Chicago, Dallas, Los Angeles, Portland (Oregon), San Diego, San Francisco, San Jose, and Seattle. Clearly, a trend has been established.
Accordingly, green buildings, and the related LEED standards developed by the United States Green Building Council, are topics which all contractors, suppliers, owners and their attorneys should be aware if they wish to remain commercially competitive.i Office of the Federal Environmental Executive, The Federal Commitment to Green Building: Experiences and Expectations, §V Defining Green Building (2006).
ii Greg Kats, The Costs and Financial Benefits of Green Buildings – A Report to California’s Sustainable Building Task Force, viii (2003); United Stated Green Building Counsel, Building Momentum – National Trends and Prospectus for High-Performance Green Buildings, 1 (November, 2002).
iii Greg Kats, The Costs and Financial Benefits of Green Buildings – A Report to California’s Sustainable Building Task Force, ix (2003); Local Laws of the City of New York No. 86, §1 (2005).
iv A copy of Local Law 86 can be found athttp://www.nyc.gov/html/dob/downloads/pdf/ll_86of2005.pdf
v Local Laws of the City of New York No. 86, §1 (2005).
vi See “Rating Systems” at www.usgbc.org