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Washington, D.C. Enacts Green Building Requirements for Private Projects
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April 16, 2007
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By Emily A. Jones
Thelen Reid Brown Raysman & Steiner LLP
Washington, D.C.'s Green Building Act of 2006 went into effect on March 8, 2007. The act establishes new standards for "green building," applicable to both private and public projects in the nation's capital. It requires compliance with the Leadership in Energy and Environmental Design (LEED) Green Building Rating System created by the United States Green Building Council, a nonprofit organization.
Washington is the first major U.S. city to require LEED compliance for private projects. New York City's green building law, which went into effect on January 1, 2007, applies only to municipal projects. In enacting the Green Building Act of 2006, the District joins nearby Montgomery County, Maryland, in requiring LEED compliance for some private projects.
The new green building standards will be mandatory in the District by 2009 for private construction projects with 50,000 square feet or more. Public projects may have to comply with the new standards as early as 2008. The act also includes an incentive program, designed to encourage early adoption of the new standards.
"Green building" is defined by the act as "an integrated, whole-building approach to the planning, design, construction, operation, and maintenance of buildings and their surrounding landscapes that helps mitigate the environmental, economic, and social impacts of buildings, so that they are energy efficient, sustainable, safe, cost-effective, accessible, healthy, and productive."
This goal is to be achieved by requiring compliance with LEED green building standards. LEED compliance will be regulated through the issuance of building permits and certificates of occupancy as well as a verification process. The LEED standards vary with the type of project being built. There are LEED standards for new construction and major renovations, existing building operations and maintenance, core and shell development, commercial interiors, homes, neighborhood developments, multiple building and on-campus projects, and schools.
The LEED rating system assigns points to a project for compliance with specific green building techniques or activities. To attain LEED certification, a project must earn a base number of points and meet several mandatory prerequisites, such as providing a centralized recycling storage area in the building. An owner or developer may select from among other green building activities to earn points. For example, providing bicycle storage areas and changing rooms for building occupants earns a project 1 point. The activities for which points are awarded are organized by category: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation and design process. Exceeding the certification point range earns a project silver, gold or platinum status. The D.C. Act requires either "certification" or "silver" status, depending on the project.
Green building standards will be integrated into the District's construction codes. The act directs the mayor to submit construction code revisions incorporating green building standards by January 1, 2008. Where green building practices and the construction codes conflict, green building practices will have priority.
The Green Building Standards
By January 1, 2009, privately owned, non-residential projects with 50,000 square feet of gross floor area or more involving new construction or substantial improvements must submit a green building checklist as part of the building permit application. The checklist will document the elements of green building that are to be integrated into the project. Within two years after receipt of a certificate of occupancy, these projects must be "verified" as having met or exceeded the applicable green building requirements.
Verification is defined in the act as "confirmation [by the District] that the green building requirements of this act have been fulfilled." The verification process is to be performed by a District agency or third party, as the mayor may determine. The act does not specify the verification process to be used.
Green building standards will apply to District-owned nonresidential projects first funded in the fiscal year 2008 budget or later and projects for which 15 percent or more of the total project cost is publicly funded in fiscal year 2009 or later. These projects must meet the LEED-NC 2.2 or the LEED-CS 2.0 standards at the silver level.
District-owned projects with at least 10,000 square feet of gross floor area also must be designed to achieve 75 points on the EPA national energy performance rating system as determined by the EnergyStar Target Finder Tool, which helps set energy use goals at the project planning and design phase. The project must be benchmarked annually using the EnergyStar Portfolio Manager benchmarking tool, which assesses buildings' energy and water data, tracking consumption, performance and cost. Building system monitoring and maintenance accountability methods must be instituted upon receipt of a certificate of occupancy. Within two years of receipt of a certificate of occupancy, compliance with applicable standards must be verified.
By October 1, 2008, each tenant that has a certificate of occupancy for a commercial use and that engages in major renovation of a District-owned building space of at least 30,000 square feet of gross floor area or more must meet or exceed the LEED for Commercial Interiors standards, LEED-CI 2.0, at the certification level. Compliance with the standards must be verified by the District.
District-owned residential projects with 10,000 square feet or more of gross floor area must meet or exceed the Green Communities 2006 standard or its substantial equivalent. The Green Communities standard is the national green building program designed by Enterprise Community Partners that provides criteria for the design, development and operation of affordable housing. A self-certification checklist and verification that standards were met must be submitted as part of the application for a certificate of occupancy.
The act provides for exemptions from LEED requirements "in unusual circumstances and only upon a showing of good cause" based on "practical infeasibility or hardship of meeting a green building standard," determination that the public interest is not served by compliance or other compelling circumstances. The exemption process is to be instituted through rules promulgated by the Mayor. The Mayor may grant extensions of time for verification under the act for up to three successive four-month periods.
Performance Bond Requirements
The act also contains bonding requirements tied to the verification process. For all privately owned nonresidential projects of at least 50,000 square feet, the act requires that a performance bond be provided to the District. The ordinance provides in §6 that "[o]n or before January 1, 2012," all private project "applicants" for construction are required to post a performance bond "due and payable prior to receipt of a certificate of occupancy." As written, the act is perplexing. It appears that it should read "on or after January 1, 2012." Nor is it plain what is intended by the requirement that the bond be "due and payable prior to receipt of a certificate of occupancy."
While the language of the act is not entirely clear, the act seems to require that the bond be posted at the time of application for a building permit. In lieu of a bond, the statute also permits the Mayor to accept an irrevocable letter of credit from a financial institution authorized to do business in the District or evidence of cash deposited in an escrow account in a financial institution in the District.
The bond requirement is designed to ensure that the project complies with the act's green building standards. The bond is held by the District. If verification is not provided within two years after the first certificate of occupancy is issued on the project, all or part of the bond is forfeited to the District. This means the bond will be outstanding from the time the project building permit is applied for until the District verifies the project - up to two years after the certificate of occupancy is issued.
Bond amounts are set at a percentage of total cost of the building, based on square footage. For a project not exceeding 150,000 square feet of gross floor area, the bond amount is 2 percent of the total building cost; for 150,001 to 250,000 square feet, the bond amount is 3 percent of the total building cost; and for more than 250,000 square feet, the bond amount is 4 percent of the total building cost. The bond amount is capped at $3 million. A letter of credit or escrow account must be in the amounts required for the bond.
The act itself does not set out procedures for drawing down or for return of the bond but directs the Mayor to promulgate rules establishing these procedures. Those rules must be issued within 180 days of the effective date of the act, March 8, 2007. Before the rules are effective, they will go to the District Council for a 45-day review period, which excludes weekends, holidays and Council recesses. The Council will then have the opportunity to approve or disapprove the rules.
Incentives for Early Compliance
The act directs the Mayor to establish an incentive program to promote early adoption of green building practices. The incentive program is to include a "Green Building Expedited Construction Documents Review Program" by which construction documents that comply with code requirements and other laws must be approved within 30 days of submission.
The act also provides incentives in the form of grants for early compliance: from October 1, 2009, to December 31, 2011, to any applicant for a building construction permit for a commercial private building that will meet or exceed the verification requirements of the LEED-NC 2.2, LEED-CI 2.0 or LEED-CS 2.0 standards at the certification level; from January 1, 2012, to December 31, 2015, to any applicant for a building construction permit for a commercial private building that will meet or exceed the verification requirements of the LEED-NC 2.2, LEED-CI 2.0 or LEED-CS 2.0 standards at the silver level; and from October 1, 2009, to December 31, 2015, to any applicant for a building construction permit for a residential private building that will fulfill or exceed the verification requirements of the LEED-NC 2.2, LEED-CS 2.0 or Green Communities 2006 standards.
Grant amounts are not set by the act. The grants are to be paid out of a "Green Building Fund" and are subject to availability of funds. The Green Building Fund will be funded by a green building fee to be assessed as part of the building construction permit fees. The green building fee will be set at a rate of $0.0020 per square foot for new construction; an additional 0.13% of construction value for alterations and repairs exceeding $1,000 but not exceeding $1 million; and an additional 0.065% of construction value for alterations and repairs exceeding $1 million. The Green Building Fund also will be funded by performance bonds forfeited to the District for failure to meet the verification requirements of the act.
Conclusion
The Green Building Act of 2006 undoubtedly will increase initial construction costs. In addition to the potential costs of implementing the LEED standards themselves, the performance bonds and green building fees required by the act will increase project costs, as will participation in the act's verification process. However, the new green building standards do allow for flexibility. The LEED rating systems permit election among a number of options to achieve LEED certification. Certification requires that a project meet a few prerequisites and select a combination of LEED activities for each rating system. Balancing the compliance costs, LEED-certified buildings are more energy efficient. As energy costs continue to rise, more efficient buildings will provide savings to owners and tenants on a long-term basis
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For more information about the issues covered in this report, please contact Emily A. Jones in our Washington, D.C., office at 202-508-4381 or at eajones@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©2007 Thelen Reid Brown Raysman & Steiner LLP
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