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Sustainable Development & Green Building Challenges Posed By An Evolving Regulatory Framework Presentation by Lucia Chiocchio, Esq. & Anna L. Georgiou,

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Presentation on theme: "Sustainable Development & Green Building Challenges Posed By An Evolving Regulatory Framework Presentation by Lucia Chiocchio, Esq. & Anna L. Georgiou,"— Presentation transcript:

1 Sustainable Development & Green Building Challenges Posed By An Evolving Regulatory Framework Presentation by Lucia Chiocchio, Esq. & Anna L. Georgiou, Esq. May 9, 2012 Lucia Chiocchio, Esq. Anna L. Georgiou, Esq. Cuddy & Feder LLPWormser, Kiely, Galef & Jacobs LLP 445 Hamilton Ave, 14 th Floor399 Knollwood Road White Plains, NY 10601White Plains, NY (914) (914)

2 2 What is “Sustainable Development”? Development that meets the needs of the present without compromising the ability of future generations to meet their own needs...

3 3 What is Green Building? Buildings designed, located, built and operated using environmentally friendly principles to promote occupant and public health, conserve resources, and minimize detrimental impacts on the environment...

4 4 New York State In excess of 100 local governments have adopted serious climate change and energy efficiency initiatives Problem NYS lacks a cohesive integrated strategy.

5 5 NEW YORK STATE New York ranks eighth highest out of the 50 states in terms of carbon emissions. Many local governments in New York have voluntarily signed onto the U.S. Conference of Mayors Climate Change Agreement.

6 6 According to US Green Building Council buildings nationwide account for: 70% of electricity consumption 39% of energy usage 12% of potable water consumption 40% of raw materials usage 30% of waste output And produce 39% of associated green house gases

7 7 And in New York State According to NYSERDA (New York State Energy Research and Development Authority), energy use in residential & commercial buildings contributes approximately 42% of all GHG emissions.

8 What do the “Green” Terms mean? 8

9 LEED: Leadership in Energy and Environmental Design – green building certification system developed by the U.S. Green Building Council (USGBC) – LEED rating systems are developed through an open, consensus-based process led by LEED committees. Energy Star is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy that provides an energy efficient rating system. 9

10 What do the “Green” Terms mean? GBI: The Green Building Initiative (GBI) is a not for profit organization whose mission is to accelerate the adoption of building practices that result in energy-efficient, healthier and environmentally sustainable buildings by promoting credible and practical green building approaches for residential and commercial construction. NAHB: National Association of Home Builders: National Green Building Standard™ defines green building for single and multifamily homes, residential remodeling projects and site development projects while still allowing for the flexibility required for regionally-appropriate best green practices. 10

11 What do the “Green” Terms mean? RESNET: Residential Energy Services Network developed by the National Association of State Energy Officials and Energy Rated Homes of America as a national market for home energy rating systems and energy efficient mortgages - RESNET standards are recognized by the U.S. mortgage industry for capitalizing a building's energy performance in the mortgage loan ASHRAE: The American Society of Heating, Refrigerating and Air-Conditioning Engineers: publishes a well recognized series of standards and guidelines relating to HVAC systems and issues. i.e. LEED 11

12 What do the “Green” Terms mean? Sustainable Development: meet present needs without compromising the ability of future generations to meet their needs (1987 UN conference) HERS: Home Energy Rating System: – Based on the 2006 International Energy Conservation Code, a home built to the specifications of the HERS Reference Home scores a HERS Index of 100, while a net zero energy home scores a HERS Index of 0 – The lower a home's HERS Index, the more energy efficient it is in comparison to the HERS Reference Home 12

13 What do the “Green” Terms mean? Payback: how to calculate the cost effectiveness of an energy efficient installation/appliance Simple Payback Calculation: (Standard Installation Cost – Energy Efficient Installation Cost)/ Annual Energy Savings According to HUD (U.S. Dept of Housing and Urban Development), any energy efficiency measure with a payback of 15 years or less is considered to be cost effective, as long as the payback period is not greater than the useful life of the energy efficiency measure 13

14 What do the “Green” Terms mean? LED: light-emitting diode: replace watt incandescent bulbs with equivalent light output and only consume 3-13 watts GEOTHERMAL: thermal energy stored in the earth - residential buildings and small businesses, a heat pump, air delivery unit and a system of buried pipes are used to transport geothermal heat from the Earth 14

15 15 Local Authority Opportunities to Promote Sustainable Development

16 16 Local Authority Zoning enabling statutes & other provisions of N.Y. Town Law, Village Law, Gen. City Law, Gen. Municipal Law, Environmental Conservation Law N.Y. Municipal Home Rule Law authorizes adoption of laws for “the protection and enhancement of its physical... environment.”

17 17 Local Authority Home Rule - a local law may not be inconsistent with the state constitution or general state law (Exception Supersession Authority (NY Mun. Home Rule Law § 10(1)(ii) (d) (3)). Preemption- Local gov’ts cannot exercise police powers in an area that has been preempted by State /Federal Law (specific declaration of preemption or comprehensive/ detailed regulatory scheme)

18 18 Examples of Local Strategies to Reduce GHG Emissions Comprehensive Plans Open Space Preservation Smart Growth Initiatives Environmental Review (SEQRA) Streamlined Review Process for “Green” Projects/Construction Promote Solar & Wind Energy Financing Green Renovations (PACE) Tax Incentives Benchmarking Green Building Codes Green Zoning

19 Local Green Building Codes Regulatory Framework

20 20 NYS FIRE PREVENTION & BUILDING ACT Purpose of act- provide minimum level of protection in building construction and fire prevention

21 21 The Code Council formulates and amends the NYS Building Code No Local Law can be less restrictive More restrictive by application

22 22 NYS ENERGY Conservation Construction Code Act

23 23 ENERGY CODE Permits local government to promulgate a local energy conservation code that is more stringent than the Energy Code Applies to new building construction Renovations of existing buildings only if the renovation is “substantial” - i.e., only if the renovation involves the replacement of more than 50% of a “building subsystem” such as exterior walls, floors, and ductwork. Many renovations and building system replacements that do not meet this threshold are not required to comply with the Energy Code.

24 24 ENERGY CONSERVATION CONSTRUCTION CODE FIRST ADOPTED IN 1979 & AMENDED SEVERAL TIMES SINCE Exceeded 2003 International Energy Conservation Code (Residential) with 2004 Amendments On April 1, 2010 Code Council adopted updating amendments (effective December 2010) (2009 IECC) in accordance with provisions of State Energy Program of the American Recovery and Reinvestment Act.

25 OTHER STATE ENERGY CODES 25

26 CALGreen As of January 1, 2011, new residential and nonresidential buildings in California must comply with the 2010 California Green Building Standards Code or “CALGreen” (Part 11 of the California Building Standards Code). 26

27 CALGreen MANDATES Reduce water consumption by 20 percent; Divert 50 percent of construction and demolition (C & D) waste from landfills; Reduce energy consumption by 15%; Install low pollutant-emitting materials; Install separate water meters for nonresidential buildings’ indoor and outdoor water use; Mandatory inspections of energy systems (e.g., heat furnace, air conditioner and mechanical equipment) for nonresidential buildings over 10,000 square feet 27

28 28 COMMON APPROACHES Green Building Energy Code Energy Star LEED

29 29 ENERGY STAR Focus on single family / small multi residential construction Generally (but not always) exceeds NYS Energy Code standards for energy efficiency Focus on energy efficiency

30 30

31 31 LEED Green buildings certified through an independent third party, the US Green Building Council’s program, Leadership in Energy and Environmental Design (LEED®) NOTE OTHER CERTIFICATIONS NAHB National Green Building Standard, Green Building Initiative (GBI ), Green Globes.

32 32 Under the LEED® certification program green building design focuses on five main categories and offers additional bonus points for innovation in design and regional considerations

33 33 LEED Credit Categories/Commercial Sustainable Sites - encourages good stewardship of the land, taking care to minimize adverse project impacts on surrounding areas during and after construction. Water Efficiency - encourages the thoughtful use of water. Energy and Atmosphere –focus is energy performance

34 34 More LEED Credit Categories Materials and Resources - requires that collection and storage of recyclables is provided for in building design and operations & use of recycled materials, locally manufactured environmentally responsible materials, certified wood and re-used materials. Indoor Environmental Quality – focus on optimal lighting, thermal comfort and healthy indoor air quality for occupants. Innovation in design & Regional priority (Bonus)

35 35 LEED FOR HOMES Credit Categories Innovation & Design Process Location & Linkages Sustainable Sites Water Efficiency Energy & Atmosphere Materials & Resources Indoor Environmental Quality Awareness & Education

36 36 LEED FOR HOMES points LEED Certified points LEED Platinum

37 37 LEED NYS encourages state projects to seek LEED certification EXAMPLE -Syracuse all municipal new construction & major renovation to meet LEED Silver

38 LEED 2012 New “Integrated Process” category; New “Location and Transportation” category that collects location-related credits from LEED-NC with others from LEED for Neighborhood Developments; New “Performance” category which includes commissioning credits along with a handful of new measurements in reporting prerequisites and credits. Currently in draft form. Public comment period last open in Projected release date for LEED 2012 is November 2012, but timeframe may be extended.

39 Municipal Green Building Ordinances Municipal level ordinances and regulations that mandate energy efficient buildings and other green house gas reduction practices Town of Greenburgh: requires residential buildings to comply with Energy Star standards and adopted “Green Building Initiative and Energy Conservation Construction Standards” regulations that adopt, in principle, LEED for New Construction rating system 39

40 Municipal Green Building Ordinances PlaNYC: Greener, Greater Buildings Plan Four separate efficiency laws – Benchmarking standards for certain buildings – Compliance with the NYC Energy Conservation Code (NYCECC) for all renovations – Energy audits and retro-commissioning (building system tune-up) every 10 years for certain buildings – Upgrade lighting to meet NYCECC standards in certain large non-residential buildings 40

41 Municipal Green Building Ordinances Columbia Law School’s Center for Climate Change Law (CCCL) – Drafting a model municipal ordinance on green buildings – Releasing a revised version incorporating comments from various sources – Model ordinance to avoid several legal issues such as Federal & State preemption; Non-delegation; Antitrust The Town of New Castle, New York adopted a comprehensive green building law that is based on the CCCL model ordinance. 41

42 42 Mandating 3d Party Green Building Requirements Potential Constraints and Considerations

43 43 Potential for Preemption Federal Energy Laws NYS Fire Prevention & Building Code

44 44 Federal Preemption FEDERAL PREEMPTION A NEW MEXICO FEDERAL DISTRICT COURT ENJOINED THE CITY OF ALBUQUERQUE’S ENFORCEMENT OF CERTAIN PROVISIONS OF ITS BUILDING CODE IMPOSING ENERGY EFFICIENCY STANDARDS FOR MAJOR RESIDENTIAL AND COMMERCIAL APPLIANCES AND EQUIPMENT, INCLUDING HVAC PRODUCTS AND WATER HEATERS, THAT EXCEEDED FEDERAL STANDARDS FOR THESE PRODUCTS. AIR CONDITIONING, HEATING AND REFRIGERATION INSTITUTE V. CITY OF ALBUQUERQUE, 2008 WL (D.N.M.).

45 Update on AHRI v. City of Albuquerque (Fed. Dist. Ct. New Mexico, Decided January 25, 2012) Summary Judgment granted to Plaintiffs -all provisions of the Code relating to the energy efficiency of the equipment and products covered by the Code were preempted as a matter of law. Prescriptive compliance path provisions of the Code were not severable from Performance-based compliance path provisions. But what was not decided ………………………. The Federal District Court did not reach the issue of whether the performance-based compliance path provisions (i.e. LEED Silver) are independently subject to preemption under the Energy Policy and Conservation Act (42 U.S.C § 6297(f)).

46 BUILDING INDUSTRY ASSOCIATION, et al. v. WASHINGTON STATE BUILDING CODE COUNCIL BIAW sought an injunction and a declaration that federal Energy Policy and Conservation Act (EPCA) preempted the revised Washington State Building Energy Code. The court rejected these arguments, holding that the revised Energy Code met EPCA’s building code exception, namely because it provided other means for compliance than solely using products that are more energy efficient than federal standards. (Fed. Dist. Ct. W.D. Washington, Decided February 7, 2011) 46

47 47 Possible State Preemption PREEMPTION PROBLEMS MAY ARISE IF 3rd PARTY GREEN BUILDING STANDARDS CONFLICT WITH THE STATE FIRE PREVENTION AND BUILDING CODE.

48 48 Potential Problems Delegation of Authority Total reliance on Third-Party signoffs Incorporating by reference future changes to 3rd party green building standards in local laws may be an unlawful delegation of legislative authority

49 49 THIRD PARTY SIGNOFFS DUTIES OF A BUILDING INSPECTOR INVOLVE THE EXERCISE OF THE POLICE POWER AND THE PERFORMANCE OF DISCRETIONARY FUNCTIONS. STATUTORY DUTIES AND RESPONSIBILITIES OF PUBLIC OFFICIALS WHICH INVOLVE THE EXERCISE OF DISCRETION OR JUDGMENT CANNOT BE DISCHARGED BY CONTRACTING WITH, OR OTHERWISE DELEGATING SUCH AUTHORITY TO PRIVATE PARTIES, UNLESS AUTHORIZED BY STATE LEGISLATION.

50 50 IMPROPER DELEGATION OF LEGISLATIVE AUTHORITY Incorporating by reference generally & subsequently adopted amendments to 3d Party “Green Building” standards.

51 51 Antitrust Considerations U.S. GREEN BUILDING COUNCIL’S LEED RATING SYSTEM IS NOT THE ONLY GREEN BUILDING RATING SYSTEM. GREEN BUILDING INITIATIVE (“GREEN GLOBES RATING SYSTEM”); THE NATIONAL ASSOCIATION OF HOME BUILDERS (“MODEL GREEN HOME BUILDING GUIDELINES”) COLLABORATION FOR HIGH PERFORMANCE SCHOOLS (“CHPS CRITERIA”) ENERGY STAR IS A JOINT PROGRAM OF THE UNITED STATES DEPARTMENT OF ENERGY AND ENVIRONMENTAL PROTECTION AGENCY AND PROVIDES AN ENERGY EFFICIENCY RATING SYSTEM

52 LEGISLATING A SPECIFIC BUILDING RATING SYSTEM MAY RAISE ANTITRUST ISSUES THE GOOD NEWS …………………………. MUNICIPALITIES ARE GENERALLY IMMUNE FROM DAMAGES, FOR VIOLATIONS OF THE ANTITRUST LAWS, BASED UPON THE LOCAL GOVERNMENT ANTITRUST ACT OF 1984 ANTITRUST CONSIDERATIONS

53 53 BUT…………. MUNICIPALITIES REMAIN LIABLE FOR DECLARATORY AND INJUNCTIVE RELIEF BASED UPON ANTITRUST LAW VIOLATIONS, UNLESS THEY CAN CLAIM PROTECTION UNDER THE “STATE ACTION” IMMUNITY DOCTRINE.

54 Latham Act Lawsuit Filed Against USGBC Motion to Dismiss Granted August 15, 2011 Gifford, et al. v. USGBC (Feb. 7, 2011, SDNY) Engineers and Architect assert false advertising claims under federal, state and common law. Relief sought-money damages and injunctive relief against USGBC, enjoining it from promoting the energy efficiency of LEED buildings and/or “benefits of the LEED system” and compelling it to “disclose the actual energy use of LEED properties.” Southern District granted Defendant’s Motion to Dismiss based on Plaintiffs’ lack of standing to bring claims under Latham Act, specifically Plaintiffs did not adequately allege a reasonable commercial interest that is likely to be damaged by USGBC’s alleged false statements. 54

55 55 Green Building Complications & Risks Design Considerations Project Team/Liability Untested Green Technology When Third Party Certifications are Delayed

56 56 Challenges How do 3rd party certifications mesh with the locality’s issuance of a C of O, substantive and procedural aspects? 3rd Party Certification and holistic approach to Green Building may change relationships between architects, construction managers, contractors and others who are part of the construction team Insurance - Property insurance exclusions for Green Building replacement, professional liability exclusions

57 INNOVATION 57

58 Benchmarking Measuring the amount of energy used in a building and comparing it with similar buildings 58

59 AUDITS Audits report a building’s energy use and performance, as well as measures that can be taken to increase energy efficiency and reduce costs. The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) has established several levels of energy audits. Level 1 includes a walk-through of the building and a preliminary energy analysis. This level identifies the most obvious energy efficiency initiatives available for a building, such as lighting upgrades. Levels 2 and 3 provide comprehensive analyses of building energy use, efficiency upgrades, and return on investment. 59

60 Benchmarking California Recently adopted legislation requires commercial buildings to release water and energy benchmark data and ratings for the previous 12 months to parties in commercial real estate transactions involving the sale, lease or financing of a building. 60

61 Benchmarking NYC In 2013 all private buildings over 50,000 square feet (as well as public buildings over 10,000 sq. ft.) must conduct ASHRAE Level 2 energy audits every ten years and submit the results to the NYC Dept. of Buildings 61

62 62 PACE Property Assessed Clean Energy. Clean Energy Development Area established A municipal entity capable of issuing low-interest bonds is created. The bond funds are used to offer financing for renewable energy and energy efficiency improvements on residential and commercial properties. Interested property owners can opt-in to receive long term financing for renewable energy and energy efficiency improvements (repaid through an assessment on their property taxes that automatically transfers to the next property owner if the property is sold). Examples of energy improvements— solar installations, energy efficient boilers, upgraded insulation, etc NYS Enabling Legislation Federal DOE funding

63 63 PACE IN NYS Enacted November 2009, the new law authorizes municipalities to establish a PACE program to apply for federal funds and to thereafter issue such funds as loans to qualifying homeowners and businesses for installation of energy efficient retrofits and renewable energy systems. Energy efficiency improvements include window and door replacements, insulation and heating and cooling system upgrades and renewable energy systems (solar, thermal, geothermal, wind and fuel cell technologies). “Freddie” & “Fannie” stall program

64 HUD & Fannie Mae Green Refinance Plus HUD’s Federal Housing Administration (FHA) and Fannie Mae program allowing owners of existing affordable rental housing projects to refinance to include funding for energy and water saving upgrades along with other needed property renovations Program requirements include: – Property must be at least 10 years old, with a recorded use agreement of the affordability restrictions that extends for at least the term of the new loan to help preserve affordable housing. – At least 5% of the refinance loan proceeds must be applied to property renovation or energy retrofit. – All rehabilitation and energy improvements must enhance value and improve property operations.

65 “Zone Green” Proposed Changes to NYC’s Zoning Resolution December 2011 Permits solar panels, green roofs, storm water systems, skylights and other green features on buildings. Permits owners to install wind turbines up to 55 feet above rooftops on waterfront buildings and buildings taller than 100 feet with free standing turbines authorized on waterfront blocks in nonresidential areas. Exempts external building insulation from floor area requirements

66 NYC’s ZONE GREEN Permit solar panels to be installed on any building roof, by allowing them as a “permitted obstruction” above the height requirement. Permit sun control devices to project from building facades over required open areas. Accommodate green roofs, rooftop wastewater management equipment, boilers or cogeneration facilities. Waiver of floor area and height limits for greenhouses on top of non- residential buildings

67 67 GREEN BUILDING Unintended Consequences

68 Green Building Construction Failure to achieve certification Loss of project financing, public or private Failure to meet local regulatory framework Not eligible for tax abatements/ delays 68

69 Keeping Buildings Green Sustainability and Green Construction is more than just the building and appliances LEED and other standards incorporate sustainability best practices – For example: utility fixtures and faucets occupancy sensor lighting energy efficient light bulbs filter ratings on HVAC equipment electrical consumption caps HVAC availability outside normal business hours compliance with recycling practices Cleaning products 69

70 Keeping Buildings Green Tenant Build-Out: indoor air quality compliant products (paint, carpet, laminates, adhesives, low VOC materials); energy management; waste management plan; use of recycled material Maintenance of “Green” Appliances – some appliances may require maintenance technicians “green” appliance expertise – i.e. HVAC - geothermal systems 70

71 Keeping Buildings Green Green Leases – USGBC Green Office Guide: Integrating LEED into Your Leasing Process – Building Owners & Managers Association (BOMA): Lease Guide: Guide to Writing a Commercial Real Estate Lease, Including Green Lease Language – REALpac National Standard Green Office Lease for Single Building Projects leases/http://www.realpac.ca/green-office- leases/ – New York Energy Efficiency Lease Guidance – for tips and model language to avoid the “split incentive” where sharing operating and capital expense responsibilities diminish landlord’s recovery of capital invested in efficiency 71

72 RISK ALLOCATION Property Owner Design Professional Contractor Engineer Green Building Consultant 72

73 Riverhouse Litigation (NY Cnty Sup Ct, /10) Condo owners seek $1.5 million in damages from project’s developer for construction defects, including failure of green heating system to provide adequate heat. Allege such failure is a condition which “is materially different from those represented by the project sponsor and its principals in the condominium offering plan.” 73

74 Shaw Development v. Southern Builders Litigation settled in 2009 Md. tax credit required achieving at least a LEED Silver rating & completing project before established expiration date. In lawsuit commenced by contractor, developer’s counterclaim alleged contractor was responsible for loss of project’s tax credit, worth $635,000 on a $7.5 million project. 74

75 Regulations To Be Aware Of – Commercial Development Bulk and Area Requirements; Parking Requirements Site Plan Special Permit Drainage/Pollution Prevention Plans Landscaping Requirements Architectural Review Board review Steep Slopes Wetlands 75

76 Regulations To Be Aware Of – Residential Development Bulk and Area Requirements Site Plan Special Permit (tennis courts; pools) Drainage/Pollution Prevention Plans Landscaping Requirements Architectural Review Board review Steep Slopes Wetlands 76

77 Regulations To Be Aware Of – Variances - Commercial and Residential Area variances for dimensional non- conformities (setback, parking) Use variances for uses not permitted on parcel – very difficult to obtain 77

78 GREEN ZONING & PERMITTING: THE NEW REALITY SHOW? Relationships with Municipalities – Get to know the Planner, Building Inspector, Zoning Enforcement Officer – Talk to the municipal officials before embarking on a project to understand the requirements – Have a “Plan B” – Know the history of the property – Understand the politics of the area 78

79 GREEN ZONING & PERMITTING: THE NEW REALITY SHOW? Public Hearings – Some permits/approvals require public hearings – Learn the deadlines and notice requirements – publication in a newspaper; mailing notice to neighbors; posting a sign at the property – If a public hearing is required, talk to your neighbors before notice is published/mailed – Obtain letters in support from neighbors, particularly those that would be most affected 79

80 GREEN ZONING & PERMITTING: THE NEW REALITY SHOW? Public Hearings – Attend a public hearing before the hearing on your application to observe the process; comments from the approving board; comments from the public – Be prepared – know your project and the required approvals; timetables – Clearly articulate your plan and emphasize benefits to the community 80

81 Sustainable Development & Green Building Challenges Posed By An Evolving Regulatory Framework Presentation by Lucia Chiocchio, Esq. & Anna L. Georgiou, Esq. May 9, 2012 Lucia Chiocchio, Esq. Anna L. Georgiou, Esq. Cuddy & Feder LLPWormser, Kiely, Galef & Jacobs LLP 445 Hamilton Ave, 14 th Floor399 Knollwood Road White Plains, NY 10601White Plains, NY (914) (914)


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