Green Building Series: A Quick Primer on Green Building and the LEED, Green Globes and ENERGY STAR Frameworks

This blog entry is the first of a Green Building Series that will focus on the different third party frameworks, green liability issues, “greenwashing” claims; government incentives, green building in Ohio, Kentucky, Indiana and Tennessee, solar and other energy conservation issues, green leasing and whatever hot button issues arise as this area of the law begins to develop itself.

“Green” is more than just a buzz word in the real estate and construction industries today. The U.S. EPA defines green building as the practice of creating healthier and more resource efficient models of construction, renovation, operation, maintenance and demolition. The benefits of green building are: reduced operating costs; increased property value; desirable perception as an environmentally friendly consumer; reduced strain on the environment; and potential availability of tax rebates or other government incentives for the property. Until recently, many people placed a higher value on the costs of green building than the perceived benefits. Many had assumed the costs would result in a 25% or greater increase in overall construction costs.  The United States Green Building Council ("USGBC") recently sponsored a study that showed building green costs on average result in only a 2.5% up front construction cost increase.  The established approach is beginning to change. Large, multinational retailers such as Wal-Mart and Starbucks have instituted green initiatives for their properties. PNC Bank requires each newly constructed branch office be green. Ten states, including Ohio, have enacted statutes that require certain buildings funded entirely, or in part, by the state be green. Cities such as Cincinnati, Chicago and Seattle each have green building initiatives. Large federal government properties are also now required to be green.

How can a building or tenant space be classified as green?

There are multiple frameworks and classification systems that allow buildings to be considered green, but the three most widely accepted and third-party-administered green classification systems are ENERGY STAR, Green Globes and Leadership in Energy and Environmental Design Green Building Rating System (“LEED”). The E.P.A. and Department of Energy have established ENERGY STAR to certify buildings as green. Green Globes, which is administered by the Green Building Initiative, is a third-party system that rates green buildings. Experts consider it a cost-efficient and user-friendly system, but not the most demanding of the best green building practices. The most established, widespread and stringent green building guidelines in the U.S. is LEED. The USGBC administers LEED certification for new construction, existing building renovations, commercial interiors, core and shell design, schools, retail, healthcare, homes and neighborhood development. LEED certification is further divided into four ratings: (i) Certified, (ii) Silver, (iii) Gold, and (iv) Platinum. Various LEED related initiatives are found in the legislation, resolutions, ordinances or policies of seventy-eight cities, twenty-four counties, twenty-eight states and twelve federal agencies. The USGBC has tracked approximately 1,300 LEED certified projects as of May, 2008.

Geoff White is a Senior Associate in the Commercial Transactions and Real Estate Group at Frost Brown Todd, which has a Resource Conservation Committee that is helping it go green.  Mr. White is licensed to practice law in Kentucky and Ohio and is a member of the Kentucky Chapter of the U.S. Green Building Council.  Learn more about Geoff White.

Posted by: Geoffrey M. White