LEED Certification


I read an article recently on the Atlanta Journal Constitution’s website in which representatives from local property management firms expressed opinions about the costs v. benefits of applying for LEED certification for their buildings and projects.

Some of the property managers that were quoted in the article said that they did not seek LEED certification—even for buildings that would likely meet LEED standards—because the costs of filing for the certification were too high.  Additionally, they state in the article that they don’t believe that they have lost any tenants for non-LEED buildings.

As an alternative to LEED certification, some of the property management firms are seeking other green building/energy efficiency certifications such as Energy Star ratings.  In some instances, the property management firms themselves have developed their own “green building” promotional branding, which highlights the sustainable and efficiency characteristics of the property.

Of course, all of the property management firms identified in the article have embraced LEED buildings to some extent within their businesses and portfolios—even those firms whose property managers felt that LEED certification costs were too high for some projects to be of value.  So, obviously none of these firms have completely

Do you agree that LEED certification costs are too expensive to be of value to property management firms or building owners?

 

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For all those that have been waiting to see whether the LEED rating system would spark litigation, the wait is over.  On October 8, 2010, a class action lawsuit was filed against the USGBC and its founders.  The suit was filed by Henry Gifford and his company Gifford Fuel Saving, Inc. on behalf of “consumers, taxpayers, and building design and construction professionals.” 

Gifford has apparently been an outspoken opponent of the LEED rating system for a while, and in his lawsuit he alleges that the USGBC falsely claims that the LEED rating system creates energy savings when it does not and by doing so deceives building owners, designers, and other building professionals into believing that LEED buildings are more energy efficient than non-LEED buildings.  Of course, I’m paraphrasing the allegations—you can download the actual complaint here to read all of the claims.

Shari Shapiro has written a great commentary on www.greenbuildinglawblog.com about whether the designated categories of plaintiffs are similarly situated enough in order to survive the fairly rigorous legal standards for certifying a “class action.”  I agree with her assessment that the types of plaintiffs and the ways in which they have allegedly been damaged by the LEED rating system do vary widely.   For this reason, I believe the attorney for the plaintiffs has an uphill battle to fight on the class certification. 

But aside from the class action aspect of the lawsuit, Gifford’s main arguments are that the USGBC is perpetrating a huge fraud against the world by claiming that LEED certified buildings are energy efficient.  He claims that LEED does not require verification or actual energy use data to measure performance of energy savings strategies for which LEED points are awarded.  (Under the latest version of LEED—LEED 3.0—measurement and verification of energy performance is required following construction)   He also claims that the USGBC has manipulated data from a study performed by the New Buildings Institute (NBI) in March 2008 to falsely promote that LEED buildings are more energy efficient than non-LEED buildings.

Now, I obviously don’t know enough about the facts to make a judgment as to whether they are true.  But, I also feel like Gifford is not giving enough credit to his purported class of plaintiffs.  To believe Gifford’s allegations, you have to believe that sophisticated building owners and operators, as well as licensed design and construction professionals have all been misled by the USGBC to believe that LEED certification equals energy efficiency—end of story.  That ignores the fact that the LEED rating system has 5 other core areas of sustainable strategies that are part of the certification point system.  Energy efficiency is just one aspect of LEED, not the whole enchilada. 

 Is Gifford suggesting that building owners do not have any idea what they are bargaining for when they contract for a LEED-certified building?  Or does he simply believe that the value the owners place upon the LEED certification is solely based upon the energy efficiency strategies that are implemented rather than the cumulative impact of all of the sustainability measures that are part of a LEED building?

This case has just started and many bloggers and other green building professionals (including me) will be analyzing it and writing about as it progresses.   So, there will be more to come on this case.

What do you think about this lawsuit?  Do you think it has merit?

Engineering News-Record (ENR) recently reported in its July 5, 2010 issue that revenue from projects registered with and actively pursuing green building certification by a third-party sustainable-design standard organization–like LEED and Energy Star–rose 16.8% in 2009 for ENR’s Top 100 Green Design Firms.  According to ENR, the total revenue from these projects rose to $3.3 billion, up from $2.85 billion in 2008, and includes both private and public projects, though revenue was largely generated from private sector markets such as retail, hospitality, multi-unit residential and health care.  This is pretty remarkable given that funding for private construction projects has all but disappeared since the banking industry bailout and since the recession hit the development and construction industries like a “ton of bricks.” (pun intended)    

 It would be reasonable to expect that the demand for green building and third-party certifications would decrease during these tough economic times because of the additional cost associated with green building and sustainable certifications.  So, why is green building bucking the recession trend?  Here are my thoughts:

  • Owners are taking advantage of tax credits and other government economic incentives designed to promote reduced energy use and encourage alternative energy production
  • Owners are recognizing that green building is not simply a status symbol or marketing tool to lure tenants—they are understanding that the implementation of many of these green building initiatives will reduce energy and operating costs
  • The cost to build green has come down—the old notion that green building was significantly more expensive than traditional design and construction techniques is no longer true
  • More state and local governments are including green building rating systems in their building codes for both public and private construction

There are probably many more factors that have contributed to the rise in green building revenue despite the recession, which I haven’t mentioned.  What all of this tells me is that we are thinking green now.  Green building initiatives are becoming the baseline for design and construction rather than extraordinary and unique features. 

 Do you believe that green building and sustainability is the new way of doing business for the design and construction industries?

To date there are more than 136,444 people, according to Green Building Certification Institute, who have earned LEED Accreditation status however, it is still unique for attorneys to possess this designation.  For attorneys who focus primarily on the construction and real estate industries, obtaining the added knowledge and understanding of ever-evolving green building practices can mean the difference between general legal advice and specific and strategic sustainability-based legal counsel capable of advising you on the latest issues and development in green building law.

As the green building industry emerges, it brings with it new legal issues that have not been encountered in the past.  Without laws and cases addressing these issues, many green building legal issues are novel and must be resolved without looking to past legal precedents.  Lawyers specializing in green building, including LEED AP attorneys, are adept at identifying and helping clients avoid the potential myriad of risks and problems that may arise on green building projects and in green leases.

Green building lawyers provide a unique two-pronged approach to clients in the construction and building management industries by supplying the legal expertise needed to craft solid contracts and agreements and by knowing and understanding green strategies that work from start to finish.  Attorneys who possess LEED insight and knowledge can assist building owners, designers, contractors, and suppliers in drafting and negotiating appropriate contracts, and in identifying and planning for risks involved in the green building process.  LEED AP attorneys also bring added value to drafting and negotiating leases because the attorneys understand the unique features of the green buildings that are appealing to tenants, as well as those issues that are common points of negotiation or disputes.  By addressing those properly in the lease, attorneys help clients avoid costly litigation that arises from misunderstandings or unwritten terms.

In addition, LEED AP attorneys have the unique capability to advise clients on the various tax incentives available from the national government and in each state to ensure that LEED certified projects are as cost efficient as possible.  To maximize the benefit of these incentives, building owners and facility managers must know about the tax incentives before the design is completed or the green strategies are implemented so that the requirements of the tax incentives are incorporated into the project.  Opportunities for incentives can be lost if the tax provisions are merely a secondary thought or if they are considered after the project is underway or completed.  This combination of expertise enables LEED AP attorneys to understand the many variables to green building, allowing them to be a true partner from design to construction and building operations.

Successful green building requires concentrated coordination of several disciplines.  Many project teams do not remember to include legal issues in their early coordination efforts when those legal issues are most easily and affordably addressed.  For clients in the construction industry, working with a LEED AP attorney can provide a host of benefits throughout each phase of a construction project.

What has your experience been like when working without a LEED AP attorney?

There is no national legislation or regulation that defines the standards for green building.  At this point, one of the most widely recognized and utilized standards is the LEED certification program developed by the U.S. Green Building Council (“USGBC”).  LEED stands for Leadership in Energy Efficiency Design.

Architects, real estate professionals, facility managers, engineers, interior designers, landscape architects, construction managers, lenders and government officials all use the LEED designation because it is recognized both here and internationally as a credible standard.  The criteria set forth in the LEED programs address the complete lifecycle of buildings, providing owners and operators with a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions.

There are many benefits that come with attaining LEED certification for a building project.  It offers compelling proof to clients, tenants, peers and the public at large that defined and measurable sustainability and environmental goals have been set and achieved.  LEED certification allows building owners and managers to take advantage of a growing number of national, state and local government incentives, and can help boost third party interest in a building project.

The USGBC has assigned four levels of LEED Certification – Certified, Silver, Gold and Platinum.  Each level corresponds to a range of total points accrued in five green design categories, which include: sustainable sites (SS), water efficiency (WE), energy and atmosphere (EA), materials and resources (MR), and indoor environmental quality (IEQ).  The USGBC has developed specific LEED standards to cover new commercial construction and major renovation projects as well as interiors projects and existing building operations.  The newest version of LEED—LEED v3—incorporates commercial “core and shell” construction and schools into the new construction and existing building operations standards.  LEED also has a separate rating systems for residential homes that is different from LEED v3. In addition, USGBC is developing programs specific to neighborhood developments and healthcare facilities.

LEED projects must meet mandatory prerequisites in several core categories and earn the minimum points for the selected rating system.  Examples of prerequisites include features such as: erosion control and construction site pollution reduction for sustainable sites and minimum energy efficiency requirements for energy and atmosphere.  Points are allocated across each of the core categories:

  • Sustainable Sites
  • Water Efficiency
  • Energy & Atmosphere
  • Materials & Resources
  • Indoor Environmental Quality
  • Innovation in Design

It is important to note that because technologies constantly evolve and sustainability practices continue to advance year after year, the USGBC updates guidelines for the LEED green building certification program on an ongoing basis.  The most recent revisions were made in 2009 when LEED v3 (also referred to as LEED 2009) was introduced as the new set of criteria for certification.  In LEED v3 there are 100 possible base points plus an additional 6 points for Innovation in Design and 4 points for Regional Priority.

In order to obtain a LEED certification for a building or project, the owner or project team must submit documents and information demonstrating compliance with all of the prerequisites as well as the requirements for all points that are attempted.  Some of the criteria are design-related, some are construction related, and still others are related to the operations of the building.

The level of certification that is awarded depends upon the number of points achieved by the project team:

  • Certified – 40 – 49 points
  • Silver – 50 – 59 points
  • Gold – 60 – 79 points
  • Platinum – 80 points and above

The appeal of the Northland Pines High School Gold certification was significant because it was the first time that a third-party had challenged the award of a LEED certification to a project. (see my June 23rd post)   Naturally, there was wide-spread interest in the process and outcome of that appeal and now there is no shortage of speculation as to what impacts that appeal will have on future certifications and awards (and potentially decertifications).

I had planned for my first blog post to be an introduction to LEED—an overview of the U.S. Green Building Council’s comprehensive and widely-used rating system and its significance to the green building movement.  However, there is a recent significant issue relating to an appeal of a LEED certification rating that is at the forefront of green building news currently.  You will see it referred to as the Northland Pines High School Appeal.

You can find a detailed recitation of the facts surrounding the Appeal as well as the key Appeal documents at www.greenbiz.com

Here is just a brief summary of the Appeal, as set out in the original documents:

  • Northland Pines High School in Eagle, Wisconsin was the first public high school to be awarded Gold LEED certification in May 2007 under the New Construction (NC) 2.1 standards.
  • In December 2008, members of the Northland Pines High School Building Committee and concerned tax payers, along with two engineers, filed an appeal of the Gold certification given to Northland Pines.
  • The Appeal challenged the award of Gold certification on the basis that the design and construction of the school did not meet LEED prerequisites EA1 (Fundamental Building Systems Commissioning), EA2 (Minimum Energy Performance) and EQ1 (Minimum Indoor Air Quality Performance).
  • More specifically, the challengers claim that certain mandatory standards were not complied with ANSI/ASHRAE Standard 62.1-1999 (Ventilation for Acceptable Indoor Air Quality) and ANSI/ASHRAE/IESNA Standard 90.1-1999 (Energy Standard for Buildings Except Low Rise Residential Buildings), together with numerous violations of the Wisconsin Code.
  • The challengers also claim that the violations of the ANSI/ASHRAE/IESNA Standards could not have been cured without a complete redesign of the HVAC system, which was never done.
  • In April 2010, the U.S. Green Building Council (USGBC) issued a formal written response to the Appeal affirming the Gold certification to Northland Pines High School, stating that “after extensive review, USGBC and its consultants have no reason to believe that the project failed to meet all of the LEED prerequisites and credits that it has attempted.  Thus, USGBC will not act to revoke certification or disallow any prerequisites or credits.”
  • On June 5, 2010, the challengers issued an Appellant’s Executive Summary Response in which they criticized USGBC for, among other things, relying on documentation and information that was obtained from the designers only after the Gold certification was awarded and for using post-submission design and/or construction changes as a basis for compliance—suggesting that the original submission for certification was inadequate to prove compliance with the prerequisites.

This Appeal raises numerous issues about the LEED certification process that green lawyers have predicted for some time.  At a minimum, this Appeal shows that the LEED certification requirements and process are open to subjective interpretation and potentially arbitrary enforcement.  In this case, engineers on both sides make technical arguments to support their conclusions that the prerequisite standards have either been violated or complied with.

Does the USGBC’s affirmation of the Gold certification in this case set a “dangerous precedent” as the challengers suggest in their Executive Summary Response?  Does the USGBC have an incentive to affirm certifications rather than to revoke them, or does the real threat of revocation for noncompliance add credibility to the LEED rating system?  These are just a few of the issues raised by this appeal that will be analyzed and discussed in the green news and this blog in the coming months.

We’ll continue to look at issues that can emerge from the Northland Pines High School LEED Appeal in future posts, and we’ll get back to the basics of LEED and other rating systems as well.