Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Stites & Harbison Law Firm : Green Building & LEED Litigation

It really is impossible to put your arms around the number of green building and energy performance policies and codes that are sprouting up all across the nation.  When a project involves private commercial development or public investment, one of the most discussed issues is whether the cost of obtaining LEED certification from the U.S. Green Building Council is worth the investment.  And so the cost versus certification debate continues ... and one county in Montana has found the middle ground.

Yesterday, commissioners of Missoula County, Montana approved a policy that encourages and promotes green building practices, as long as they save money in the long run.  According to chair of the Commission, “This is the closest thing we'll come to having an energy policy. If the feds won’t do it and take the lead, I’m just honored to be a part of this.”

The policy directs county offices and departments to “incorporate” or “support the use of” LEED methods and techniques when designing, remodeling and operating public facilities. Unlike other counties in the United States that have recently required a specific level of LEED certification, the Missoula County policy will require “the highest level achievable under LEED that’s cost-effective based on the long-terms cost and the limits of available funding.”

As state and local leaders are racing to develop and implement new building practices—whether they incorporate USGBC’s LEED, Energy Star, Green Globes, or some other rating system—I think the compromise by Missoula County is a step in the right direction.  Such a policy would allow the public or private developer to incorporate cost-effective criteria in its development plans, while at the same time would require that owners and developers adhere to sustainable building practices.

There remains one problem: consider the owner who seeks the highest level of LEED certification that is cost effective based upon its long-term costs and limits of available funding and it is determined that LEED certification would not be possible. What then? Have they complied with the local building policy or code?

Image: satosphere

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About a year ago, I wrote a post on the trending topic of LEED revocation or de-certification.  That issue has not gone away ... it actually has been brought to the front page of the news.  The hot topic, recently reported by Stephen, Chris and Doug (...sounds like three men in a tub...), involves the LEED certification received by Northland Pines High School in Eagle River, Wisconsin. 

When the story first began buzzing around the internet last year, I called Larry Spievogel, an independent engineering consultant, who was giving a presentation on "the actions of the designers that led to the first ever decertification of and plaque removal from a LEED Certified project.”  What I learned a year ago was just confirmed by fellow bloggers, as well as another friendly email from Larry.  Here is what Larry sent me:

• The Executive Summary
• December 23, 2008 appeal to USGBC
• Correspondence with USGBC
• January 5, 2010 report of Horizon Engineering Associates
• April 26, 2010 report of Taylor Engineering
• April 27, 2010 letter from USGBC
• North Pines' response to Horizon report
• North Pines' response to Taylor report
• North Pines' statement

I am not going to retell the facts or the procedural background to this dispute (...you can check out the three men in a tub for that ...).  However, since it worked so well for the Spearin Doctrine, here is my Tweet about the LEED certification challenge in less than 140 characters:

Green school built. LEED color gold. Cheddar-heads revolt. GBC-Gods review. LEED challenge tossed. What now? Green atty!

According to representatives for the School, the fundamental allegations in the appeal for the revocation of the LEED certification are that the building did not comply with the mandatory ASHRAE prerequisite standards.  Since these standards are prerequisites to any level of LEED certification, the School argues that even a single instance of non-compliance with the ASHRAE standards provide a sufficient basis to deny certification.

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As a follow-up to my post yesterday about the costs of LEED certification, I was not surprised to read the following lead line in a local newspaper in Cary, North Carolina:

"Cary wants to be green. Just not certifiable."

According to the article, the local town council voted to skip the green building certification process because of the high costs.  "If the economy was in a better situation, I'd consider it," said Councilman Don Frantz, who made the motion to skip the certification. "But I just can't see the justification on moving forward and spending extra money."

The Cary fire station is the perfect example of the dilemma faced by commercial developers and public owners seeking to embrace green construction.  For instance, the fire station will spend more than $100,000 on energy-saving features in the new construction.  However, it would cost the town approximately $41,500 in registration, certification and other costs to have the fire station become LEED certified, according to a town report.

At the heart of this debate is the recognition that, to some, the goal is energy and other savings over the life of the building, while, to others, the goal is focused on sustainability.  In other words, to the Town of Cary, the estimated cost savings of employing green standards is approximately $580,000 over the next five years.  Since cost savings was a driving factor, the $41,000 associated with the LEED certification process was a significant amount. 

Nonetheless, the Town had a number of proponents supporting certification.  According to Town Council members who supported the effort, "seeking LEED certification would ensure that high environmental standards would be met."

Given this background, why would an owner-developer want to seek LEED certification? Here are some initial thoughts on the issue: 

1. It makes good business sense.  The LEED certification, which includes a rigorous third-party commissioning process, can offer compelling proof to you, your clients, and the community at large that you've achieved your environmental goals and your building is performing as designed.
2. It is a good investment.  Not only do LEED certified building embody good business practices, the USGBC's seal of approval can be a great investment and result in increased property values.  A LEED-certified building can garner a greater premium than a non-LEED certified building for the simple fact that it is ... well ... LEED-certified.  One provision here: the building standards should, in fact, result in operational cost-savings and energy cost-savings. 
3. It provides good incentives. There are numerous state and local incentive programs that offer tax breaks, faster or cheaper permitting, and other incentive programs for seeking the LEED certification.  Whether it makes sense that lawmakers are basing these programs on USGBC's LEED programs or incorporating LEED requirements into local building codes are not the issues.  Here, the issue is that you can in many locations receive great incentives for doing so.

Question: What additional benefits can you identify for the Town of Cary to go through the LEED certification process?

Image: www.architex.ca

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Most owner and developers would imagine that the most significant costs of LEED certification are the front-end registration and back-end submittal costs.  Are they correct?  Depends.

Environmental Building News prepared a primer on the costs of LEED certification for commercial construction.  As noted in the article, LEED certification includes various costs that must be considered separately in order to correctly analyze the total package.  According to EBN, here are the traditional costs explained in more detail:

1. The fees. Registration and certification fees are roughly 3¢–5¢ per square foot, depending on the size of the project and other factors.
2. Cost of documentation time and effort. This cost could be for an outside consultant hired just for that task, someone on the staff of the design firm, the contractor, or the owner. This is a big project for someone doing it for the first time and not such a big deal for someone who has done it enough to have figured out the process.
3. Cost of extra research, design, commissioning, and modeling for compliance. If your baseline is the cost to have a design team create a variant on their last few non-LEED projects, then designing to meet LEED standards will take some extra effort. But these added costs shouldn’t be attributed just to LEED—they are the costs of getting a better building. LEED introduces a few requirements that add costs if they are not already part of the scope of the project. At $0.50–$1 per square foot, commissioning, for example, may seem like a big investment, but it’s cheap compared to the cost of call-backs, fixes, and inefficiencies that are likely if you don’t do it.  If energy models aren’t code-required, then the LEED-specific model represents an added cost that starts at $5,000–$10,000 and goes up, depending on the complexity of the project.
4. Costs of construction. Including green measures can mean added construction costs such as the following: demand-controlled ventilation adds about $1/cfm to the cost of a standard ventilation system; bike racks will cost about $5 per full-time equivalent (FTE) occupant; occupancy sensors cost about $25 per fixture.

What does all this mean?  By looking at the diagram above, you can easily tell that construction costs account for the largest percentage of a green building project.  The real question remains whether the added costs of registration, adminstration, documentation and operation justify the savings (in terms of tax credits, cheaper operation, etc.) will justify those investments.  Check out what Minnesota has to say about the issue.  

So the real answer depends on a cost-benefit analysis.  The construction costs won't change with non-LEED certified green construction.  If the benefits and incentives are worthwhile (depending on your project type and location), then the LEED certification may be the route to go.

Image: www.buildinggreen.com

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You don’t have to click too many times through your channels on your television set without finding a reality television show. There is one for finding the right man, losing weight to the extreme, rebuilding a destitute home in five days, and even eating spiders and beetles.

Earlier this week on the evening news I witnessed a reality show of sorts in the green building arena: an investigative report by a local news station about the construction of the new Music City Center in Nashville, Tennessee.

Location: A demolished building in downtown and a dumping site out of town.

Protagonist: Ben Hall, an investigative reporter from Channel 5.

Antagonist: A local demolition subcontractor involved in the project.

Plot: In a project committed to sustainable and green construction methods, will the subcontractor take the easy way out and simply dispose of the demolition waste rather than carefully pick through the recyclable materials?

Conclusion: See the video for yourself. [Cannot see the video, click here.]

This green building reality show illustrates one of the tensions between sustainable building practices and certified sustainable building practices.  Where a project is simply committed to sustainable building practices, conceivably there is no oversight.  The end product may contain energy-saving features or other green components, but the building methods may not change.

Where a project seeks LEED certification, as does the Music City Center, there should be requisite protections in place to monitor the reuse of recyclable material and the disposal of waste material.  "We're going to try to keep as much out of the landfills by recycling it," said Larry Atema, Senior Project Manager for the Center. ". . . [F]or example, the steel to a steel recycler, the brick to a brick recycler."

So, where did checks and balances fail at the Music City Center?  According to Atema, "It should not have happened. . . . I think what is important at least to us, when we first learned of it, we went out and less than 12 hours later we had the steel picked out of the debris." According to the article, Atema said crews will have to do a better job of sorting. He said that the crews are now looking more closely at what leaves the demolition site.

It will be interesting to follow this project through construction, as well as the LEED certification process, to see whether the Music City Center wins its green building reality show prize.

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When discussing the short and long term building performance of a green project, the issue generally comes down to the following question: Is there any identifiable or measurable gap between the predicted building performance (in the design and construction phases) and the actual bulding performance (during occupancy, operation and maintenance)?  This issue has been addressed in part by a number of my colleagues, including Stephen Del Percio ("Energy Performance in LEED Buildings: A History") and Chris Cheatham ("Real Life Example of the Energy Performance Gap").

Yesterday, I saw the following following press release: USGBC Tackles Building Performance Head On.  The USGBC announced the Building Performance Initiative, which is intended to assist LEED building owners and project teams to close the gap between predicted performance and actual performance.  The new initiative seeks to tackle building performance by the following:

1. Employ a comprehensive data collection effort from all buildings that have acheived LEED certification;
2. Implement an appropriate method to analyze the data collected; and
3. Provide feedback to building owners.

There will be four summits held across the country in September and October to preview the proposed data collection and data analysis methods.  "The local summits are a way to gather people's input for our vision and also for them to share their performance stories, successes and challenges," said USGBC LEED Senior Vice President, Scot Horst.

Although USGBC says that it is ready to rumble by tackling building performance head on, it will be interesting to see some of the ideas previewed in these summits.  Already, we have heard from numerous industry players about the proposed enforcement tactic of revocation.  One of the more significant unknowns is determining whether LEED certification (based upon design and construction) should be separate from building performance (based upon actual assessment). In other words, will USGBC have a multi-tier certification for design/construction and performance? Will USGBC have a conditional certification based upon predicted performance? Will USGBC extend the certification process to include building performance? The USGBC better be ready to rumble!

Photo: Wade

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