Local Developer and "Green Building"

Sustainable Development is ultimately defined by those who practice its ways in our local communities. This is a guest post from Peter Berman, a principal of Ruby Construction Services in Goshen, NY:


Green Building and Sustainable Development are certainly hot topics in the local construction and development industry. From our experience, we know that light commercial and residential customers are interested in these features. In response to this interest, many developers and builders have grabbed on to the words “Green” and “Sustainable”. Many go so far as to make definitive and measurable statements. It is not uncommon to hear “this will cut your energy bills in half” or “your health will be greatly improved”. These comments can be quite hard to quantify and in fact many experts would agree that they are often baseless. We must resist this urge to Go Green just for names-sake or to make promises that cannot be verified. Rather the focus of Green Building and Sustainable Development should start with an evaluation of processes. How is a project planned? How are materials ordered? How is waste handled? What quality control is employed to ensure that the building basics are being done properly so we don’t create a poor indoor air quality?

At The Ruby Group www.RubyGrp.com our road to “Green” has led us to some basic costs savings; by improving our processes and eliminating waste, we are saving money by focusing on “Reduce, Reuse, Recycle”. While many of these techniques don’t have the same panache as Zero-Energy structures, they are in fact legitimately “Green”. Of course we are also prepared to and do install advanced “Green” systems, ranging from spray insulations to Heat Recovery Ventilators to Photovoltaic Systems.

The Construction and Development Industry should be encouraged to optimize their systems both for improved profits and increased sustainability. After those first steps, Green Building should occur as consumers show a willingness to pay for it. As an Industry we should be responsible for making it available by effectively communicating the advantages. Then it will be the customers’ responsibility to make the investment.

Orange County Citizens Foundation hosts Green Building Conference

The Orange County Citizens Foundation held its "Prospering in a Green Economy" Conference on April 6, 2009. The speakers included Patrice Courtney Strong, on behalf of NYSERDA, who discussed the various funding and credit options available from NYS for green building construction; David Church, from the Orange County Planning Department, who discussed the state of local zoning laws and the need to incorporate "green building" regulations at the State, County and local levels; Peter Berman of Ruby Construction Services who touched on the difficulties associated with local municipal zoning and planning processes; and Jim Taylor of Taylor Global Recycling Group (bio-mass technology), Vincent Cozzolino of the Solar Energy Consortium (photovoltaic), and Paul Auerbach of Total Green (geothermal), who spoke about the opportunities and barriers they face as entrepreneurs in marketing and selling their sustainable building products.

Here are my personal impressions of the Conference:

* There is an incredible amount of passion in those creating, developing, selling, and installing "green technology".

* The speakers demonstrated a high level of of entrepreneurial spirit, innovation, and commitment to develop the best products for the betterment of our environmental, social and economic systems.

* Sustainable development will grow from the "ground up". Although the speakers universally lauded the Obama Administration for its commitment to sustainable development and renewable energy through funding in the stimulus package, this "top down" support will only be successful if we are able to educate the populace on the need to reduce carbon emissions through green building practices, to train the workforce in the manufacturing and installation of green technologies, and to make sustainable development the norm.

I would like to invite any business owner, builder, installer and professional involved in the "green building" business to guest-post to this blog. Send me your articles, business profiles, and other writings and I will share them with the community. Hopefully, we can develop a dialogue addressing the issues relating to sustainable development.

Enforcing "Green" Building Laws: Do "Feebates" work?

I give much of the credit for my starting this blog to Chris Cheatham who publishes the Green Building Law Update blog. Chris has been very generous with his time and advise and I thank him for that.

Chris has a number of posts about two local initiatives, one in Portland, OR and the other in Washington, D.C.

In Portland, the city council is developing a "Feebate" program which imposes a fee for construction that is mandated to meet LEED standards but fails to do so. Any fees collected would be deposited in a "green building fund". The fund would be used, in part, for "staffing and operating costs to provide technical assistance, plan review, and inspection and monitoring of green buildings."

The Green Building Act in Washington, D.C. requires the posting of a "performance bond" for projects required to meet LEED standards. If the building fails to meet LEED standards, the performance bond is forfeited to the City.

Both laws would face serious challenges in New York. The first issue is whether there is statutory authority for a local municipality to exact either payment as a "fee". In New York, there is no power to regulate land use other than through legislative grant. The most common exaction allowed by statute is the payment of parkland fees in-lieu-of-land as a condition of subdivision approval. State statute allows local municipalities to provide for the collection of parkland fees in its local laws.

While neither the Portland nor the D.C. programs would find statutory authority in New York, there may be an exception. Under the NYS Municipal Home Rule Law, local municipalities may enact local laws that are not inconsistent with the state constitution or statutes. Local municipalities may also "supercede" state law unless the state has expressly prohibited the adoption of such local law. Under Municipal Home Rule, both programs would be permissible if the legislation was specifically adopted under the municipal home rule law, and there was a "rational nexus" between the property and the specified problem being addressed. Is there a sufficient nexus between either exaction and a "matter" distinctly of local concern (ie. mandating/encouraging sustainable building)? Is it more difficult to prove this nexus when the exaction is "penal" in nature?

The second issue is whether the exaction is a tax as opposed to a fee. In Radio Common Carriers of New York, Inc. v. State (601 NYS2d 513) the court defined the difference as follows: "a tax is defined as a levy made for the purpose of raising revenue for a general governmental purpose; a fee is enacted principally as an integral part of the regulation of an activity and to cover the cost of regulation". If the exaction is a tax, it must be enacted under a taxing authority granted by state law. To be considered a fee, the exactions similar to Portland and D.C. must be for the purpose of offsetting the costs of a specific governmental service, as opposed to generating revenues to offset governmental regulations generally. Is either exaction imposed to specifically offset the costs of government services provided in relation to the construction activity? Does this argument fail because the exaction will not be collected if the construction obtains LEED certification?

Are there similar issues in other jurisdictions than NY? What are your thoughts?

NYS Industrial Development Agencies and "Green" Building

For 40 years, Industrial Development Agencies (IDAs) have been providing financial incentives to businesses locating their facilities throughout NYS. According to the NYS Comptroller's Report for the year 2007, there were 115 active IDAs statewide providing $970 million in tax exemption benefits. By law, each IDA is empowered to recover a portion of such tax exemptions by programs providing for payments in lieu of taxes, commonly known as "PILOT Programs".

Each IDA develops its own tax exemption policy and PILOT Program. Of the $970 million in tax benefits in 2007, $377 million were recovered by PILOT payments. The net tax benefit to businesses totaled $593 million.

Each IDA develops its own guidelines and policies to maximize the ancillary benefits from providing tax exemptions, such as job creation and increased economic activity. IDAs are in a strong position to require, through their policies and programs, "green" development and building practices in exchange for a business receiving IDA benefits.

The Onondaga County IDA provides one example of "green" initiative by giving a "Green Building PILOT Credit" to encourage the construction of sustainable buildings. The credit is available by meeting the IDAs' Tax Exemption Policy, and by construction that is LEED certified. The basic credit is a percentage of hard construction costs ranging from 4.8% (LEED Certified) to 15.6% (LEED Platinum). Projects where 75% of the work is performed by workers located within 200 miles of Onondaga County qualify for an increase of 20% in the basic credit (Local Contractor's Incentive).

IDAs are in a uniquely strong position to accomplish substantial economic, social and environmental gains for their communities. It is a sound proposition to require sustainable development and construction when the financial benefits in return, in the form of tax exemptions, are so substantial. All IDAs should explore incorporating responsible "green" requirements in their policies and programs.

Orange County Legislature (NY) adopts "Green Building and Environmental Protection Policy"

By Resolution No. 312, Orange County, NY adopted the "Green Building and Environmental Protection Policy" on recommendation of its Green Building Study Committee. The Resolution provides that:

* One employee of the County Department of Public Works shall be "trained and accredited in LEED Standards".

* All new construction and renovation of County buildings "address and incorporate into its design 'Green Building' practices", which include "sustainable sites; water efficiency; energy and atmosphere, material and resources; indoor environmental quality and innovation in upgrades; operations and maintenance".

* Any architect hired by the County for new construction projects shall have a LEED accredited person working on the project, and such person will work with a NYSERDA representative and an engineer chosen from a NYSERDA referral list.

* All "in-house construction projects" shall avail itself of the County LEED accredited person and/or the NYSERDA representative.

The minutes of the December 6, 2007 legislature meeting indicate concern with the reference to LEED standards while omitting competing standards. It should be noted that there is no requirement that construction actually be certified as meeting LEED or any other standard, and there are no continuing compliance requirements after construction is completed.

Incorporating Third Party Standards into "Green" Legislation

In my March 1, 2009 post, I discussed the Town of Blooming Grove Zoning Ordinance provision that gives a:

"Ten-percent increase over the base lot count for adherence to New York State Energy Star guidelines, low-impact development guidelines, or U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) standards as they may be amended from time to time." (§ 235-14.1)

When a local law incorporates the standards or guidelines of a private association, in this case USGBC LEED standards, the municipality runs the risk of violating the NYS constitutional prohibition against relinquishing its legislative function. In other words, the legislative body would give up its delegated power to adopt laws and the standards contained therein.

Two factors may affect the validity of the legislation:

1. The Blooming Grove Ordinance provision is "incentive" based; it is not punitive and does not require any conduct except as to obtain the benefit of the density bonus. This type of legislation will be less susceptible to constitutional challenge than an ordinance that requires all construction to be to LEED or other third party standards.

2. An ordinance that requires compliance with a third party standard "as they may be amended from time to time" is problematic. By approving a future amendment to a private standard, the municipality improperly delegates its sovereign and legislative power, to a third party. The legislature loses control over its laws, and improperly empowers private entities, which may gain a benefit in the marketplace from its control of the legislation.

Towns, Villages and Cities considering "green" legislation should be careful to either adopt its own standards or incorporate with specificity third party standards that exist at that time. If thoses standards are amended by the third, the municipality should be prepared to amend the law to include the changes in the standards, if it so chooses.

New York adopts State Green Building Construction Act

In September, 2008, Gov. Paterson signed into law the "State Green Building Construction Act", as Article 13 of the NYS Energy Law. The intent of the law is to require the new construction and "substantial renovation" of State buildings to be "green". The main provisions of the bill are:

* The State is to give "preference" to reconstruction of existing buildings in considering the need for new construction.

* The NYS Department of Conservation (DEC) shall "promulgate rules and regulations in order to implement the purpose of this article."

* When developing the rules and regulations, the DEC is to be "informed" by the LEED criteria developed by the USGBC, the Green Globes rating system developed by the Green Building Initiative, historic preservation considerations, and reference the "Green Building Credit" in the State's Tax Law (Section 19).

* The definition of "substantial renovations" uses the "50% rule" discussed in my February 27, 2009 post ("NY State Bar Association issues report on Climate Change"). Renovations of less than 50% of any building "subsystem" are exempt from the law. The law also exempts projects for which the "consultant selection process or in house design has been completed."

The DEC has already promulated regulations setting forth green building standards for construction qualifying for the "Green Building Credit" (6 NYCRR 638.7) It is worth noting that the State has chosen to adopt its own "green building" standards, and has not adopted LEED, Green Globes or other existing standard by reference.