To our clients and friends:
We present you with our August issue of Mintz Levin’s Green Building Newsletter.
In This Edition
Law & Policy Updates:
In the Spotlight: HydroPoint Data Systems
Recent Articles & News
Questions or Comments?
Law & Policy Updates
Leadership in Energy and Environmental Design (LEED) is an independent, third-party green building certification system that promotes sustainable building and development practices by defining and measuring “green buildings.” In March 2000, LEED was developed by the U.S. Green Building Council (USGBC), a nonprofit organization committed to a prosperous and sustainable future through cost-efficient and energy-saving green buildings.
The USGBC’s mission is “[t]o transform the way buildings and communities are designed, built, and operated, enabling an environmentally and socially responsible, healthy, and prosperous environment that improves the quality of life.” 1
LEED is one of USGBC’s preeminent programs developed to provide building owners and operators with a framework for identifying and implementing practical and measurable green building design, construction, operations, and maintenance solutions.
LEED has become the common benchmark for sustainability and has rapidly become the largest and most widely recognized green-building design certification program in the country. The LEED program is constantly evolving and maturing and the USGBC projects the release of the next update of the LEED rating system in November 2012 (LEED 2012).
This article is the first in a series that will provide details on the current LEED rating systems and will also highlight proposed changes as they are released by the USGBC. This first article provides an overview of the existing LEED certification program, and the subsequent articles will touch on more details of each of the LEED certification program’s nine rating systems and changes proposed to those rating systems by LEED 2012.
LEED by the Numbers
Nine Rating Systems
LEED sets forth nine rating systems for reviewing projects as distinguished by specific building type, sector, and project scope. A project is reviewed under one of the following nine rating systems.
- New Construction (NC). LEED for New Construction and Major Renovations certifies (1) the design and construction of new commercial or institutional buildings and high-rise residential buildings of all sizes, public and private, and (2) extensive alteration work in addition to work on the exterior shell of the building and/or primary structural components and/or the core and peripheral mechanical, electrical, and plumbing service systems and/or site work. LEED for Schools (SCH), LEED for Retail, and LEED for Healthcare (HC) all fall under the LEED-NC rating system in certifying the design and construction of new buildings and major renovations for these specific occupancy types.
- Existing Buildings: Operations & Maintenance (EBOM). LEED for Existing Buildings: Operations & Maintenance certifies the sustainability of ongoing operations of existing commercial and institutional buildings and requires recertification at least once every five years to maintain certification status.
- Commercial Interiors (CI). LEED for Commercial Interiors certifies the design and construction of interior spaces, and only tenants who lease their space or do not occupy the entire building are eligible to seek certification. LEED for Retail also falls under this rating system in addressing tenant spaces in retail buildings.
- Core & Shell (CS). LEED for Core & Shell certifies the design and construction of projects where the developer controls the design and construction of the entire core and shell base building, but has no control over the design and construction of the tenant fit-out. Owners of LEED Core & Shell projects may require LEED-CI in tenant leases for tenant fit-outs.
- Homes. LEED for Homes certifies the design and construction of single-family and small-scale residential buildings and is designed to promote the transformation of the mainstream homebuilding industry towards more sustainable practices.
- Neighborhood Development (ND). LEED for Neighborhood Development certifies the planning and development of neighborhood projects that perform well in terms of smart growth, urbanism, and green building. For a LEED-ND project, while there is no minimum or maximum size, at least two habitable buildings has been determined to be a reasonable minimum size, and 320 acres has been determined to be a reasonable maximum size.
Seven Building Topics/Credit Categories
LEED studies seven building topics that are the same across each of the rating systems except LEED for Homes and LEED-ND. The topics consist of both prerequisites and credits. The credit categories measure the overall performance of a project by awarding points for credits achieved in each of the categories.
- Sustainable Sites (SS). In the SS category, points are awarded based on the location of the project and use of the entire project property, so as to minimize the project’s impact on the site.
- Water Efficiency (WE). In the WE category, points are awarded for water-efficient practices, both indoor and outdoor.
- Energy & Atmosphere (EA). In the EA category, points are awarded for energy efficiency, particularly in the building envelope and heating and cooling design.
- Materials & Resources (MR). In the MR category, points are awarded for efficient utilization of materials, selection of environmentally preferable materials, and minimization of waste during construction.
- Indoor Environmental Quality (IEQ). In the IEQ category, points are awarded for improvement of indoor air quality by reducing the creation of and exposure to pollutants.
- Innovation in Design (ID). In the ID category, points are awarded for special design methods, unique regional credits, measures not currently addressed in the applicable rating system, and exemplary performance levels.
- Regional Priority (RP). In the RP category, points are awarded for the achievement of credits that address geographically specific environmental priorities identified by the USGBC Regional Councils and Chapters as having additional regional environmental importance.
LEED for Homes adds the Location & Linkages topic, which awards points for the placement of homes in socially and environmentally responsible ways in relation to the larger community. LEED for Homes also adds the Awareness & Education topic, which awards points for the education of the homeowner, tenant, and/or building manager about the operation and maintenance of the green features of a LEED home. The LEED-ND rating system addresses the following additional topics: Smart Location & Linkage, Neighborhood Pattern & Design, and Green Infrastructure & Buildings.
Four Certification Levels
In order to earn LEED certification, a project must satisfy all the prerequisites and qualify for a minimum number of points to attain one of the four levels of certification. Four levels of certification are possible, depending on the number of criteria met, and indicate increasingly sustainable building practices. Certification is awarded according to the following scale for all rating systems except LEED for Homes, which follows a 136-point scale.
- Certified: 40–49 points
- Silver: 50–59 points
- Gold: 60–79 points
- Platinum: 80 points and above
Buildings that achieve one of the above certification levels will be recognized with a formal letter of certification.
The current LEED certification system in use is LEED 2009. The USGBC’s LEED 2012 update opened for public comment in November 2010. A second round of public comments opened on August 1, 2011. The USGBC staff and LEED committees review comments and recommendations and post responses on the USGBC website. Revisions of the rating system will be made based on the comments received. The USGBC membership vote on the final draft of LEED 2012 is scheduled for August 2012, with LEED 2012 set for release on November 7, 2012.
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Green Leasing: Playing Defense
While green building and building energy efficiency have become more important for property owners and tenants in recent years, for many tenants with complex space requirements, deadlines for moving to new space, and limited budgets, a green building or a green lease simply can’t be the top priority.
Even so, in today’s market, tenants will need familiarity with green building requirements, since more landlords are bringing LEED–certified buildings online, or more likely, enrolling existing buildings in the LEED for Existing Buildings: Operations and Maintenance (EBOM) program, or have aspirations to obtain green-building certification in the future.
From the tenant’s perspective, having a landlord with green aspirations is generally good, as it’s a sign that the landlord is committed to a high-quality, energy-efficient, comfortable building. However, the tenant should make sure that the lease is clear about what costs and responsibilities will be passed through to it based on a green building initiative. Here are a few examples of language I have seen in recent leases:
Operating Costs shall include … all costs of maintaining the certification of the Building to conform to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system.
This Building is or may become in the future certified under certain Green Agency Ratings or operated pursuant to Landlord’s sustainable building practices, as same may be in effect or modified from time to time. Landlord’s sustainability practices address, without limitation, whole-building operations and maintenance issues including chemical use; indoor air quality; energy efficiency; water efficiency; recycling programs; exterior maintenance programs; and systems upgrades to meet green building energy, water, indoor air quality, and lighting performance standards. Tenant shall use commercially reasonable efforts to ensure that Tenant’s construction and maintenance methods and procedures, material purchases, and disposal of waste must be in compliance with minimum standards and specifications as outlined by the Green Agency Ratings, in addition to all Governmental Requirements.
Operating Expenses shall consist of … costs incurred in connection with Landlord’s supplying of “green” or other renewable energy; …costs incurred (capital or otherwise) in order for the Building, or any portion thereof, to apply for, obtain or maintain a certification pursuant to the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, or other applicable certification agency, in connection with Landlord’s sustainability practices for the Building and all costs of maintaining, managing, reporting and commissioning the Project or any part thereof that was designed and/or built to be sustainable and conform with the LEED rating system (or other applicable certification standard).
In each example, the tenant’s exposure to green-building costs and possible responsibilities is uncertain. We can’t tell what the building’s current green-building certification is, nor can we tell whether the landlord is currently providing clean power (or purchasing renewable energy certificates) or plans to in the future. The language is (purposefully) open-ended about whether future costs of certifications or of upgrading the building or constructing new facilities to meet new green building requirements could be charged to tenant.
These issues can generally be solved, as most landlords don’t have a secret plan to saddle new tenants with green-building renovation costs, and simply want the ability to recover costs of maintaining and operating the building to its current standard. Tenants should start the conversation by asking the landlord what the current green-building certification is for the building, and what the landlord’s plans are for future certifications and green-building initiatives. Tenants should try to limit operating expense pass-throughs for green building to ordinary, noncapital costs that are required to keep the building at its current level of operation or certification. So, if the building is a LEED: EBOM Silver building under the LEED 2009 system, then operating expenses could include costs of maintaining that level of certification. A tenant should be reluctant to pick up the costs of higher levels of certification or new certifications or building upgrades, unless it is clear that the upgrades will generate clear benefits for the tenant or save operating costs.
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San Francisco’s Existing Commercial Buildings Energy Performance Ordinance
Ordinance 17-11, passed February 8, 2011, amends the San Francisco Environment Code and requires owners of existing nonresidential buildings to conduct energy-efficiency audits and file annual energy benchmark summaries for their properties. The requirement to submit benchmark summaries and efficiency audits generally applies only to existing nonresidential buildings over 10,000 square feet. Combined with existing finance and incentive programs for energy efficient building renovation, the Department of Environment (the Department) estimates that in the first five years this new ordinance will double the current rate of commercial energy-efficiency activity. This will create many new jobs in construction, engineering, operating, sales, and tech innovation and generate an estimated net value of $600 million in private sector energy savings.
Annual Energy Benchmark Summary
Owners are required to determine how much energy their building consumes and to make that information public on an annual basis in the form of benchmark summaries. This requirement is an effort to determine the energy performance of whole buildings for the purposes of motivating and tracking improvement, targeting incentives and resources, and enabling comparison to similar facilities. The summaries submitted to the Department must utilize the ENERGY STAR Portfolio Manager rating tool and present weather-normalized use data, annual emissions due to energy use, date of last efficiency audit, and available retro-commissioning and retrofit measures, among other details. Only basic use information and the status of compliance with this ordinance will be made public for each building, though owners are required to make the annual summary report available to tenants for the purpose of engaging occupants in efficiency efforts.
For buildings larger than 50,000 square feet, a benchmark summary must be submitted on or before October 1, 2011. For buildings between 25,000 and 49,999 square feet, the initial deadline is April 1, 2012, and for those between 10,000 and 24,999 square feet, it is April 1, 2013. Annual benchmark summaries are expected annually by April 1 thereafter.
Energy Efficiency Audits
Owners must, for each building, conduct a whole building audit that meets or exceeds the standards of the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE). The level of detail required in an audit is proportionate to the building’s scale. Buildings between 10,000 and 49,999 square feet must meet the ASHRAE Level I standard (or the San Francisco Energy Watch standard or other standard approved by the city), requiring a brief on-site survey and cost analysis for low-cost and no-cost energy-saving measures as well as potential capital improvements. Buildings over 50,000 square feet, require the more rigorous ASHRAE Level II standard (or the San Francisco Energy Watch standard or other standard approved by the city), involving a more detailed on-site survey and analysis to identify all practical measures for energy reduction.
The timeline for audits will also be staggered by square footage. Buildings will be divided into three groups, and building owners will be notified in early August 2011 whether their first audit is due in August 2012, April 2013, or April 2014. By April 2014, all buildings will have been audited and should have a clear plan with options for energy savings. Updates are required every five years, and building owners will be notified a year in advance of their expected completion so that starting in 2017, the Department will annually process updated audits from roughly 20% of nonresidential buildings in the city.
Exceptions and Enforcement
All existing nonresidential buildings over 10,000 square feet are subject to the annual benchmark requirement, though in some instances owners are exempted from auditing requirements, including buildings constructed fewer than five years prior the audit deadline; buildings that have regularly received the ENERGY STAR label from the US EPA; and buildings certified under the LEED Existing Buildings: Operations & Maintenance program. Furthermore, audit deadlines may be extended for building owners in financial distress and those facing a simultaneous deadline for three or more buildings.
For those building owners who do not fall in any exemption category and fail to submit records on time and fail to comply within 45 days after a written warning is issued, the Department may impose administrative fines on the building owner. For buildings larger than 50,000 square feet, fines can be up to $100 per day for a maximum of 25 days in one 12-month period, and for buildings smaller than 50,000 square feet, the fines can total $50 a day up to 25 days in one 12-month period.
Source: Environment Code – Existing Commercial Buildings Energy Performance Ordinance No. 17-11 File No. 101105
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New Technologies and Infrastructure for Commercial and Industrial Buildings
ML Strategies hosted an Environmental Business Council panel in Boston earlier this summer to discuss the latest technologies and programs in energy efficiency for commercial and industrial buildings. Frank Gorke, formerly responsible for efficiency programs at the Massachusetts Department of Energy Resources, provided the keynote with a review of the state’s role as a national leader in energy efficiency. When an audience member asked whether all cost-effective efficiency projects have already been done, Frank responded, “We have only just begun.” Several presentations that followed his remarks profiled companies that provide cutting-edge innovations in energy-efficiency technologies and infrastructure.
As part of its comprehensive energy-management platform, which includes demand response, supply chain, and carbon emissions applications, EnerNOC offers its EfficiencySmart Insight product for monitoring building energy usage. Insight aggregates meter data to give building operators access to real-time usage data, generated in the form of interactive web-based dashboards and reports. With a clear view of operational inefficiencies, operators can reduce usage, mitigate peaks and demand charges with real-time alerts, improve the scheduling of equipment, and optimize investments in efficiency infrastructure. Since demand charges in particular can account for 20–30% of monthly bills, mitigating spikes can have a substantive impact. The Insight platform includes a benchmarking tool to enable large, multi-site organizations to compare and identify underperforming buildings.
Digital Lumens offers the first intelligent lighting system specifically designed for industrial facilities, particularly highbay and midbay lighting in warehouses, cold-storage facilities, and manufacturing plants. Run time for an industrial light is often around 8,760 hours (that is, nonstop, year-round) and $250,000 is a common annual energy bill for lighting a warehouse. LED bulbs developed by Digital Lumens emit comparable light with considerably lower wattage and heat output, and are longer-lasting and more rugged than conventional incandescent or fluorescent bulbs. This bulb technology, coupled with an intelligent system that reduces run hours and automates light delivery when and where it is needed, can often reduce energy costs up to 90% for both retrofits and new construction.
The team at iblogix believes it is a lack of quality information, not poor economics or a lack of owner motivation, that is preventing mass adoption of efficiency technologies. The software company has developed a Rapid Building Assessment platform that automates and standardizes whole building energy assessments, eliminating the need for costly on-site audits. Combining advanced analytics with econometric and energy data, its software can be used by utilities, energy service companies, and property owners to remotely benchmark building energy performance. Not only does this proactively identify and prioritize which buildings should be targeted for efficiency programs and products, but also provides specific recommendations customized to the building and customer, including operational and retrofit opportunities.
SourceOne offers energy-management and advisory services, providing customers with customized approaches to utilizing available energy resources and generating new solutions. Its analysts are trusted evaluators of new technologies, addressing common equipment ratings, such as in boilers, air-conditioning units, heat pumps, and lighting, as well as comparing system, equipment, and facility efficiencies. In considering a new hybrid boiler system, for example, a customer would benefit from SourceOne’s expert evaluation of equipment limitations, facility personnel skill levels, maintenance concerns, and rigorous financial analysis.
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Funding Solar Projects: A Panel Discussion Hosted by Mintz Levin
On June 27, Mintz Levin hosted a solar-funding panel co-sponsored by New England Women in Energy and the Environment (NEWIEE) and New England Women in Real Estate (NEWiRE). Audrey Louison, a Member of Mintz Levin’s Energy & Clean Technology Practice Group, moderated the event. Audrey’s extensive experience in energy project finance—representing developers, sponsors, and investors—aptly prepared her to moderate the lively discussions between the panelists and the constant stream of questions from eager attendees. The panelists included the following:
- John Rosenthal, the president of a successful real estate development and management business, which is developing the Yawkey Commuter Rail Station to include solar power. John also oversees an affiliate called Here Comes the Sun, LLC, which has developed nine solar photovoltaic power plants in Massachusetts.
- Elizabeth Kennedy, a project manager at the Massachusetts Clean Energy Center (CEC) who focuses on solar technology. CEC is the first state agency in the nation dedicated solely to facilitating the development of the clean energy industry.
- Natalie Andrews, the renewable energy project coordinator at the Massachusetts Department of Energy Resources (DOER). Natalie has worked extensively on solar-incentive program design and is currently focused on the Renewable Portfolio Standard (RPS) Solar Carve-out.
- Adam Braillard, a co-founder of Prince Lobel Renewables, a renewable energy project management practice within Prince Lobel Tye, LLP, a mid-size general practice law firm in Boston. Adam assists clients in the assessment, development, financing and construction of solar energy projects.
If you missed this event, keep an eye out for future Mintz Levin announcements, as the firm regularly hosts programs relating to the clean technology and green building sectors.
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In the Spotlight: HydroPoint Data Systems
Firm client HydroPoint Data Systems helps customers save water with its “smart” irrigation controllers, which schedule irrigation based on individual landscapes and real-time weather conditions. HydroPoint’s smart irrigation technology was recently profiled in Scientific American, which noted that:
[B]ecause outdoor irrigation can suck up 50 percent or more of urban water consumption, smart irrigation services have caught on in drought-prone western states like California, where water prices are relentlessly rising. (Occasional big floods don’t help the long-term problem.) HydroPoint now has more than 8,000 clients using 24,000 of its smart controllers, including Walmart, Coca-Cola, Hilton, Jack in the Box and the University of Arizona as well as the cities of Charleston, S.C., Houston and Santa Barbara. In 2011 customers are projected to save 64.4 billion liters of water and over $111 million in water expenses, as well as 68 million kilowatt-hours of water-pumping electricity.
Read the full article here.
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Recent Articles & News
“Small Commercial: Untapped Energy Efficiency,”
Greentech Media, 7/27/11
“Governor Brown to California’s Solar Industry: How Do You Beat the Regulators?,” Greentech Media, 07/26/11
“Fuel Cell Update: ClearEdge Grows, VC Flows,”
Greentech Media, 7/25/11
“21st Century Corporate Real Estate – ‘Smaller and Smarter,’”
“Venture Firms Seek Light Green Tech Bets,”
Thomson Reuters, 6/28/11
“Google-SolarCity Fund to Install Home Solar Panels,”
San Francisco Chronicle, 6/14/11
“Can Batteries Replace Power Generators?,”
New York Times, 5/18/11
“Horsepower v Cash Cows,” The Economist, 5/17/11
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Questions or Comments?
Please contact these professionals for questions or comments regarding this edition:
Jennifer Sacco Smith
David L. O’Connor
Christian W. Termyn
Katy E. Ward
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