"Green" is everywhere these days. Reducing the environmental impact of the built environment is at the top of the list for many companies looking to go green.
Many of us think of modern buildings as fairly benign: they don't visibly spew fumes into the sky or create noxious by-products. But in fact buildings do have a profound impact on the environment. By some estimates, in the United States buildings are responsible for 65% of electricity consumption; 39% of greenhouse gas emissions; 36% of all energy use; 30% of waste output; and 12% of potable water consumption (that's 15 trillion gallons per year).
As a result, in recent years a number of environmentally forward groups have developed voluntary initiatives designed to mitigate these impacts. The current prevailing standard is the Leadership in Energy and Environmental Design (LEED) program created by the U.S. Green Building Council. LEED is a points-based system in which points are awarded for a variety of elements in construction, design and in some cases operation. Projects are designated as either Certified, Silver, Gold or Platinum based on the number of points achieved. The Green Building Initiative's "Green Globes" program, which is an online program but in many other ways similar to LEED, is also gaining popularity.
For a variety of reasons, including cost savings and the "halo effect" associated with being green, green initiatives have become widely adopted without being legally mandated. But the mandates are coming. Several states (including Minnesota) now have laws requiring that buildings constructed with public dollars incorporate green practices into design and construction. Many cities – Los Angeles, Dallas, San Jose, and Boston among them – have adopted sustainability requirements into their building codes. Seattle now requires that all new construction achieve LEED Silver status. The entire town of Greensburg, Kansas, which was destroyed by a tornado in 2007, has gained national attention by seeking LEED Platinum as it rebuilds (which, considering that there are only about 80 LEED Platinum buildings in the entire country, is extraordinary). Closer to home, the Twins Stadium legislation requires that the ballpark receive LEED certification.
These trends show no signs of slowing. What, then, does a savvy in-house lawyer need to know about building green?
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Assume That If Sustainable Building Practices
Are Not Currently Mandated In The Communities Where Your
Company Has Real Estate Assets, They Will Be
Soon.
A company's investment in the real estate assets is needs to operate its business tend to be expensive and long-term. When looking at making an investment in facilities, it is always important to try to take future needs into account.
It is impossible to predict how various governmental authorities will approach the greening of the building stock within their jurisdictions. However, it is reasonable to expect that some amount of green retrofitting will be required for remodeling and expansion projects, and possibly even on sale (as is currently the case on the residential side in at least one market I am aware of). Voluntary adoption of green building practices now may avoid costly mandatory retrofitting in the future, and allows your company to get the benefit of reduced energy costs during its occupancy.
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Explore Sustainable Building Practices In ALL
Projects.
Originally, LEED certification was limited to new construction. However, the Green Building Council has recently created a LEED program for existing buildings. Recognizing that little can be done to alter design and construction materials with existing buildings, this program focuses on operation and maintenance. Even if your company is contemplating only a minor project in an existing building, making the project green may make sense.
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Leased Sites Require Special
Consideration
If you are trying to incorporate sustainable building practices into a leased site, you will need the cooperation of your landlord, and, if you are in a multi-tenant building, possibly other tenants as well. Make sure your lease fully allocates application and certification responsibilities between landlord and tenant. Is achieving a certain LEED rating a one-time event or an ongoing obligation? Does the operating expense language in your lease allow the tenant to capture the cost savings of reduced energy consumption?
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Green Certification Is A Moving Target; Make
Sure To Pin It Down
Green technology is constantly changing, and the Green Building Council, Green Globes and the other groups that evaluate green building initiatives frequently update their programs to keep up. Take care in drafting agreements so as to avoid ambiguity. For example, if you want to compel your landlord to achieve LEED certification in your lease build out, the lease should specify the level required (Certified, Silver, Gold or Platinum), and tie certification to a the existence of a version of the relevant standard at a particular point in time.
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Consider Buying Additional Property
Insurance
At least one insurance company offers a property insurance product that is specifically tailored to LEED and Green Globe certified buildings. In the event of a covered loss, this product would provide insurance for recommissioning or recertification fees (including additional fees required to certify at one level higher than before), vegetative roofing systems, debris recycling and the use of green-certified products. It also provides funds to re-build a conventional building to a green standard.
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Consult With Experts
Many professionals -- architects, contractors, lawyers – are well-versed in LEED and other green building initiatives. Take advantage of their expertise! Green building is a rapidly evolving area, and whether you are working on your first green project ever, or the first in a while, chances are the people who work in this area on a day-to-day basis will be able to add value to the process.
In just a short time, we have seen green building evolve from an offbeat idea to a trend to a best practice, and soon to mainstream acceptance. Real estate users need to be aware of this movement and anticipate further change in this direction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.