Building Green: Whether You Like It or Not
Reprinted with permission from Building Long Island magazine.

By James H. Rowland, Esq. and Scott K. Winikow, Esq.

Although there is no universally accepted definition of green building, the term has become synonymous with both building an environmentally efficient building and, whether founded or not, significant additional first cost expense for developers and owners.1 In 1998, the U.S. Green Building Council (USGBC) created the Leadership in Energy and Environmental Design (LEED) rating system in an effort to provide the building industry with consistent, credible standards for what constitutes a “green building.”2 USGBC established LEED as a “voluntary, consensus-based, market-driven” 3 national standard for developing high performance, sustainable buildings; however, certain local governments (both inside and outside New York State) are ignoring the voluntary aspect of LEED, but are instead requiring mandatory compliance with LEED, or similar green building standards. As a result, green building can no longer be viewed as something just for the environmental friendly element. Instead, green building is quickly becoming synonymous with another familiar term, mandatory.

Babylon and Beyond

In February 2006, Suffolk County passed Resolution 1028-2006 requiring the Department of Public Works to achieve LEED Certification4 of all new construction or major renovation projects over $1 million.5 In New York City, Local Law 86, which became effective on January 1, 2007, requires LEED Silver certification on all new construction, additions, and reconstructions of City-owned buildings with construction costs over $2 million.

With its recent enactment of Local Law 406, the Town of Babylon has taken the concept of building green and LEED certification one step further by becoming, according to Town of Babylon Supervisor Steven Bellone, “the first municipality in the country to adopt a comprehensive Green Building Code for all new commercial, industrial and multi-residential buildings over 4,000 square feet.”7 By enacting Local Law 40, Babylon extended government mandated LEED certification beyond public funded construction and has now made LEED certification mandatory on private sector construction. In particular, for projects in which a building application is not received by the Town by December 20, 2007, Town of Babylon Local Law 408, requires that all new construction of commercial, office, industrial and multiple residence buildings of 4,000 square feet or more obtain LEED certified status as a condition to obtaining a Certificate of Occupancy. While other cities and local governments have passed similar requirements for public works and large scale buildings9, the Town of Babylon is the first municipality in the Northeast to require LEED certification on non-publicly funded construction.10

Although Local Law 40 does not become effective until December 20, 2007, the Town of Babylon is giving incentives to those projects which satisfy LEED standards through an expedited permit process.11 In addition to the fees which must be paid to the USGBC to obtain LEED Certification, Local Law 40 also requires that every applicant pay a fee of $0.03 per square foot, not to exceed $15,000, to the Town of Babylon Green Building Fund. While the Town of Babylon will refund the fee paid to the Town upon obtaining LEED Certification, it appears that developers and owners will not be reimbursed for any fees paid to the USGBC.

One troubling aspect of Local Law 40 is its provision that no Certificates of Occupancy shall be issued unless the LEED review documentation or local variant of Green Building documentation demonstrates that the proposed building shall attain LEED certified status or the local variant acceptable to the Building Inspector. The adopted Local Law 40 does not provide for the issuance of a Temporary Certificate of Occupancy if the building is completed, but has not yet been LEED certified. Since certification from the USGBC is a protracted process which can take several years to achieve, developers and owners may face inordinate delays in obtaining a Certificate of Occupancy. Obviously, these delays can have far reaching implications, both financially and legally, and should be addressed preemptively in all contracts and financing agreements in an effort to avoid future disputes and litigation. The construction of the Tanger Outlet Center in Deer Park, New York will provide an opportunity to witness the implications of requiring green building in the Town of Babylon. Although Local Law 40 is not yet effective, the Blumenfeld Development Corporation (BDC) has agreed to build the Tanger Outlet Center in accordance with LEED Certified standards.12 Supervisor Bellone, of the Town of Babylon, observed that “the Tanger development will help establish a new and better way to build on Long Island.”13 In order to reach LEED certified standards, BDC plans to use most materials at the construction site, including wood and concrete from pre-existing buildings that need to be demolished. Plans include the use of the old concrete as a base for the new parking lot.14 Additionally, BDC has agreed to use a new 700 yard railway spur line in order to transport construction materials and debris to and from the Tanger Outlet site. Although the rail spur purportedly will cost $1 million, it is anticipated that the use of the railroad spur line will reduce emissions by keeping 5,500 trucks off the Commack Road corridor.15

It will be interesting to observe the impact Local Law 40 will have on the the cost of the project. The Town of Babylon argues that the LEED requirements will only “minimally increase construction costs”16; whereas, BDC anticipates that obtaining LEED Certification would entail a “significant seven-figure increase in construction costs.”17 Conclusion In its Green Building Action Plan for 2006, the USGBC recommends that state and local governments use “the carrot,” including financial incentives, such as New York State Green Building Tax Credit Program, and fast track permit processes, and not “the stick” to motivate private developers and owners to build green.18 Coupled with long term energy savings, increased financing specifically targeted to green building, potential increased rental income, these financial incentives could help reduce fears over increased first costs sufficiently to make even the most skeptical private-sector developers and owners consider building green. Despite the USGBC’s recommendation, however, the Town of Babylon has decided to forego the carrot by enacting Local Law 40. It appears the Town of Babylon may be at the forefront of an emerging green trend of social engineering through government mandate. As such, there is little doubt that developers and owners will be required to develop a better understanding of both green building and LEED Certification.

1 In Chapter 2 of the 2006 Building Design & Construction, White Paper on Green Building and the Bottom Line [hereinafter WHITE PAPER], the author notes that despite numerous studies which purportedly show that green buildings can be constructed at little or no dollar premium, the fear of added “first costs” remains strong among developers and property owners. BUILDING DESIGN & CONSTRUCTION, WHITE PAPER ON GREEN BUILDINGS AND THE BOTTOM LINE (Nov. 2006) available at http://www.bdcnetwork.com/article/CA6390371.html?nid=2073 (last visited Jan. 22, 2007).
2 See LEED: Leadership in Energy and Environmental Design, U.S. Green Building Council, at http://www.usgbc.org./DisplayPage.aspx?CategoryID=19 (last visited Jan. 22, 2007).
3 See LEED-NC, Green Building Rating System For New Construction & Major Renovations, Version 2.2, Oct. 2005 [hereinafter LEED Ver. 2.2] available to download at http://www.usgbc.org/DisplayPage.aspx?CMSPageID=220.
4 LEED-NC Version 2.2, the Green Building Rating System for New Construction and Major Renovation, which became effective in October 2005, contains four levels of certification. To obtain a Certified Level, the lowest level of LEED certification, a building must earn at minimum of 26 points. A Silver Level certification is achieved at 33 points, a Gold Level certification is achieved at 39 points and a Platinum Level certification is achieved at 52 points.
5 LEED Initiatives in Government and Schools, U.S. Green Building Council, December 2006 (updated February 1, 2007) available to download at http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1496.
6 Local Law 40 was enacted, pursuant to Resolution No. 860, on December 20, 2006.
7 See Town of Babylon, News, at http://www.townofbabylon.com/news.cfm?id=182&searchDate=2007-01-01 (last visited Jan. 16, 2007).
8 See Brandon Bain, Newsday, December 21, 2006, Long Island, Babylon, Town Board Approves ‘Green’ Building Code, at http://www.newsday.com/news/local/longisland/ny-ligree215023910dec21,0,22285742.story.
9 On December 5, 2006, the Washington, D.C. City Counsel passed bill #B16-0515 requiring that all publicly-owned, non-residential commercial projects achieve LEED Silver Certification. The bill further requires that, by 2009, all new construction or major renovations to non-residential private buildings of 50,000 square feet or more must submit a checklist outlining green features that will be pursued and that by 2013, non-residential and post-secondary education facilities must achieve LEED certified status. Further, Boston is amending Article 80 of its Zoning Code to require LEED certifiable design and construction for all development projects over 50,000 square feet.
10 See LEED Initiatives in Government and Schools, USGBC (updated February 1, 2007) available at http://www.usgbc.org/showfile.aspx?documentID=691.
11 See Town of Babylon, News, at http://www.townofbabylon.com/news.cfm?id=182&searchDate=2007-01-16 (last visited Jan. 16, 2007).
12 Supra.
13 See Town of Babylon, News, at http://www.townofbabylon.com/news.cfm?id=175&searchDate=2006-11-09 (last visited Jan. 16, 2007).
14 See Brandon Bain, Newsday, January 12, 2007, Long Island, Deer Park, Train a Green Machine at Building Site at http://www.newsday.com/news/local/longisland/nyligree125049336jan12,0,2215628. story.
15 Supra.
16 See Town of Babylon News, Supra Note 14.
17 See Bain, Supra Note 15.
18 See WHITEPAPER, page 60.


2007 VOL 12 NO. 1
QUARTERLY REVIEW
CURRENT LEGAL AND BUSINESS DEVELOPMENTS AFFECTING THE DESIGN, CONSTRUCTION AND REAL ESTATE INDUSTRIES