green_building_summary.docx
"Green building" is no longer an abstract concept foisted by environmental activists on an unwilling market sector, but a market driven reality re-enforced by governmental efforts. This article addresses such efforts by the Connecticut General Assembly: (1) Connecticut Public Act 07-242, which mandated changes to the Connecticut State Building Code to require buildings costing $5 million or more built after Jan. 1, 2009 and renovations costing $2 million or more starting Jan. 1,2010 to meet the Leadership in energy and Environmental Design (LEED) "Silver" standard or its equivalent; (2) Raised Bill No. 5600 in the current legislative session of the General Assembly, which will repeal the mandated changes to the Connecticut State Building Code required in PA 07-242; and (3) Raised Bill No. 5798, also pending in the current legislative session. Which will provide tax credits for Green Buildings. Factors such as tenant demand, corporate accountability, socially conscious investment vehicles and financial pressure from traditional capital providers (both equity and debt) have resulted in a "greening" trend that will redefine class A office space. Already in New York City, the market does not recognize a new building as class A space unless it meets a "green standard." In major urban markets like New York City and Boston, almost all new major construction is at least partly green and much of it achieves the highest of currently recognized standards. Market pressures should continue to motivate developers to build green in other urban areas as well. These "green" accomplishments have been achieved primarily by voluntary action, rather than by government mandate. Heavy-handed governmental efforts to compel construction and renovation to meet regulatory standards, such as Public Act 07-242, risk the unintended consequence of discouraging green development. Added as a last minute insertion without the benefit of public participation. Section 78 of Public Act 07-242 was buried deep within a 100-plus-page energy bill. The required building code amendments will apply to private and public sector projects, other than residential buildings with up to four units. Although these requirements may be waived if the Institute for Sustainable Energy finds that the cost of compliance significantly outweighs the benefits, these state building code amendments may result in increased cost and delays as well as potential litigation and the disincentive to build in Connecticut. Unless Public Act 07-242 is repealed, many important issues must be resolved. For example, the act and code amendments do not define what constitutes renovation for the purpose of imposing the LEED standard, nor do they provide guidance on calculating threshold amounts. Thus, do these amounts include expenses for environmental remediation or the cost of installing energy-efficient materials? Uncertainty also results from an absence of guidance on what constitutes equivalency to the LEED silver standard. For example, will the new requirements differentiate among office, warehouse, industrial and multifamily properties, all of which require differing construction techniques? Other crucial questions abound: What will happen if LEED certification or an equivalency determination is delayed or denied? Will this delay or denial result in the refusal to grant a Certificate of Occupancy or a penalty? What standards will the Institute for Sustainable Energy use to determine whether the cost of compliance significantly outweighs the benefits? What procedure will the institute use to assure due process to the parties whose livelihoods will be affected by those determinations? Imprudent answers to these questions could result in unjustifiable, potentially unconstitutional deprivations of property and ensuing litigation. A "wrong" answer could also inhibit both new construction and much-needed renovation, with a particularly harsh effect on the redevelopment of Brownfield properties that already suffer from the need to clean up historical contamination. More sensible solutions have recently been proposed in the General Assembly: Raised Bill 5600 would repeal the mandatory building code changes of Public Act 07-232 (although other provisions in the bill, not pertaining to the LEED standard, have engendered reasonable and understandable opposition from the business community) and Raised Bill 5798 Would establish a tax credit for real estate projects that meet or exceed LEED silver certification. The commercial real estate community should remain vigilant about these legislative and regulatory developments while continuing to recognize that green development makes sense for everyone — communities, government, owners, developers, investors, tenants, as well as for the climate and the environment. Barry J. Trilling of Wiggin and Dana L.L.P. in Stamford, Conn., is the office climate change and sustainable development inter-disciplinary practice group leader
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