More than ever before, the nation’s leading businesses are using words like “green," “renewable," “eco-friendly” and “sustainable” to describe their practices and products. This cultural shift toward promoting the welfare of the environment is also impacting the real estate industry, since many developers are now finding that they must conform to certain designated environmental standards in order to gain public entitlements for their proposed projects. This series of posts will provide an overview of the U.S. Green Building Council’s LEED standards, provide examples of how governmental entitlements may be tied to these standards, and analyze how these standards may impact lease negotiations as landlords and tenants seek to allocate the benefits and burdens of “going green.”
The first post of this series describes the green standards and the process for obtaining LEED certification.
First, understand that there are a number of agencies/trade associations which are endeavoring to establish standards for so-called “green development.” The most often cited is LEED (an acronym for Leadership in Energy and Environmental Design), developed and promoted by the U.S. Green Building Council (“USGBC”). The first LEED standard was issued in 1998. Another widely accepted standard is “Green Globes," authored by the Green Building Initiatives, a Portland, Oregon based not-for-profit organization. There is also the “Energy Star” standard, promulgated by the U.S. Environmental Protection Agency, which in addition to rating products also rates buildings. The Energy Star program tends to focus on the energy efficiency of a building, while the LEED and Green Globes programs involve a broader analysis of a project’s impact on the environment. According to a University of Minnesota study published in 2006, the LEED and Green Globe standards are very similar with respect to their ratings. This series of posts will focus on the LEED standard, since it currently seems to be more widely accepted in the U.S.
From the time the initial standards were published in 1998, the LEED standards (and rating systems) have been continually evolving. As recently as 2 years ago, there was only a single LEED standard, and all qualifying points to be considered in determining the level of LEED achievement were of equal value, without regard to the cost of the improvement. For example, installing a bicycle rack was accorded the same value toward LEED certification as installing insulated windows or solar panels, and proximity to public transportation was accorded the same weight in New York City as in Wichita, Kansas. It was only in April, 2009 that LEED modified the points system to provide for different weights to reflect the varying degrees to which a particular improvement impacts environmental and human health concerns. With revised credit weightings, LEED now awards more points for strategies that will have greater positive impacts on what the USGBC believes matters most – energy efficiency and CO2 reductions.
This evolution from “one size fits all” to a more tailored approach has resulted in different categories (and ratings criteria) for different types of projects, and with the passage of time, even more categories are likely to evolve. LEED now has the following categories:
- LEED for Existing Buildings: Operations and Maintenance (LEED-EB). This is the rating system that sets forth standards for renovation, construction and operation of existing buildings.
- LEED for Commercial Interiors (LEED-CI). This is the rating system for construction of improvements to commercial interiors, otherwise commonly known as tenant improvements.
- LEED for Core & Shell (LEED-C&S). This is the rating system setting the standard for construction of the core and shell of a new building, which is applicable for multi-tenant buildings.
- LEED for New Construction (LEED-NC). This is the rating system that sets forth standards for construction of new buildings. Within this category there are specific standards promulgated or under development for multiple types of building projects, such as retail, health care, and laboratories.
- LEED for Homes
- LEED for Schools
- LEED for Neighborhood Development
- LEED for Retail: New Construction and LEED for Retail: Commercial Interiors
The details of the weightings process vary slightly among the various categories, and according to the USGBC:
The credit weightings process will be reevaluated over time to incorporate changes in values ascribed to different building impacts and building types, based on both market reality and evolving scientific knowledge related to buildings.
Within each LEED category, there are various criteria for achievement. For example, the category for New Construction and Major Renovation addresses 7 topics, with point allocations based on defined achievement goals within each category. To provide a sense of how this works, here is a shorthand summary of some of the sorts of improvements/methods USBGC encourages with respect to these 7 categories:
- Sustainable Sites (SS) – choose a site that will have minimal impact on environmentally sensitive areas and that is not within 5 feet of the 100 year floodplain, or characterized as prime farmland; develop a brownfield site; develop within an existing community having at least a fair degree of residential density and with proximity to public transportation; encourage use of public transportation (such as by providing employee subsidies); encourage use of bicycles (e.g., bike racks and showers); encourage use of fuel efficient vehicles or car pooling, such as by affording these vehicles preferred parking, or affording shift priority to car pooling employees; provide the minimum parking required by code (and no more); maximize open space; minimize storm water runoff; minimize heat absorbing materials in hardscape areas, and promote shade; use a reflective roofing material or a vegetative roof; reduce indoor light that is visible outside the building during hours of darkness; and avoid off-site spillover lighting.
- Water Efficiency (WE) – increase water efficiency within the building (such as the use of waterless urinals, low volume fixtures, touchless fixtures, composting toilets, and the re-use of rainwater for wastewater); use water efficient landscaping, including native plantings, recycled water, or captured rainwater, and irrigation systems that can detect moistures levels in the ground; and employ strategies that encourage water conservation.
- Energy and Atmosphere (EA) – optimize energy efficiency over a baseline building; employ on-site renewable energy, such as wind or solar power; utilize motion sensing light switches and Energy Star rated equipment; contract with the public utility company to require a designated percentage of electrical energy from renewable sources; have an independent consultant review the proposed energy conservation design, and train staff upon completion; measure and report actual conservation results; and avoid refrigerant equipment that would emit ozone depleting compounds.
- Materials and Resources (MA) – reuse components of an existing building, such as the structural floor, roof decking and building envelope; recycle construction and demolition debris to minimize impact on landfills; use materials with recycled content; use salvaged or refurbished materials; use materials manufactured within 500 miles; and use rapidly renewable materials (such as bamboo).
- Indoor Environmental Quality (IEQ) - meet ASHRAE (American Society of Heating, Refrigerating and Air Conditioning Engineers) standards regarding outdoor ventilation rates; monitor indoor air quality; minimize the use of materials that emit volatile organic compounds (“VOCs”); afford a greater percentage of individual controls of lighting and air conditioning; implement a monitoring system regarding thermal comfort; maximize illumination by daylight (at least 75% of space); and maximize views of the exterior.
- Innovation in Design (ID) - an applicant can earn up to 5 points by innovating and incorporating a new design that promotes the goals of LEED.
- Regional Priority (RP) - Each region essentially awards bonus points (up to 4 bonus points) for utilizing certain designated strategies that are being promoted within that region. For example, a water conservation strategy may be accorded bonus points in Arizona, but not in North Carolina.
The achievement points are aggregated and then LEED status is awarded according to the following scale:
|Platinum||80 points and above|
The process for obtaining a particular LEED designation is somewhat detailed. The GBCI is responsible for project registration and certification. The first step in achieving LEED status is registration with GBCI. The certification process can be split between design and construction; however, the certification is not awarded until project completion. To qualify for LEED certification, there are certain minimum requirements that must be satisfied, such as that the project must: comply with environmental laws; be a permanent building; serve occupants on a full time basis; contain at least 1,000 square feet; and commit to share whole building energy and water usage data for at least 5 years. In addition to submitting plans and specifications, the submitting party is required to complete and transmit to GBCI a check-the-box style scorecard, identifying the sustainability practices that are proposed to be undertaken at the project. Based on its review of the submitted plans and the scorecard, GBCI awards points to the project. Depending on the number of points awarded, the project will be classified as either Certified, Silver, Gold or Platinum. GBCI does not do field verifications of the “as built” project, but instead relies solely on the information submitted to their offices in the Washington, D.C. area by the applicant.
The next post in the "Sharing the Green to Go Green" series will discuss many of the benefits and drawbacks developers will consider when making a decision regarding whether "to LEED or not to LEED," and will describe some of the governmental incentives which have emerged as a primary motivating factor for green development.