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A groundbreaking piece of legislation — the District of Columbia Green Building Act — could be one of the most far-reaching “green building” laws in the country. When the act was introduced in November 2005 by D.C. Council member Jim Graham, the original version provided that all but the smallest building projects — whether new construction or renovation, public or private — would have to meet the minimum requirements for certification under the Leadership in Energy and Environmental Design criteria established by the U.S. Green Building Council. After input from property-development and construction groups, the minimum size triggering the application of the act to private projects was increased from 20,000 square feet to 50,000 square feet. What sets the act apart from laws in other jurisdictions is its application of green-building benchmarks to private construction projects. Other states and municipalities (except for a few small cities) with laws or regulations aimed at promoting, encouraging, or requiring the use of environmentally sensitive products and methods impose such criteria only on public projects, or at least projects that involve a certain amount of government financing. The act looks very likely to sail through the D.C. Council. A recent nonbinding poll of council members resulted in a 13-0 vote for the act in its current form. And, of course, one of those votes was that of Mayor-elect Adrian Fenty, who, once he takes office, will have the opportunity to sign the act into law next year if it does not pass before then. The act offers a combination of carrots and sticks to mitigate what it calls “the environmental, economic and social impacts of built structures in the District.” Like other green-building enactments, the act borrows LEED standards rather than creating its own specific criteria. The main categories LEED uses to measure the “greenworthiness” of a building and its surroundings are sustainability, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation and design process. HELPING TO PAY The good news for designers and builders is that the act, during its first few years of implementation, will provide for incentives to help defray the increased costs — typically estimated by green-building advocates at a premium of 2 percent to 4 percent more than conventional construction costs, but generally viewed by the construction industry as involving cost increases of more than 10 percent. Interestingly, these monetary incentives did not appear in the original 2005 version of the act. Their inclusion came at the behest of both construction-industry and environmental groups. Similarly, the application of the act has been narrowed after input from such groups as a 40-member task force made up of representatives of real estate developers, environmental advocacy groups, and government agencies. Though Section 10 of the act requires the D.C. mayor to establish an incentive program to promote green-building practices, there is little detail about how to draft or implement these regulations. The absence of any hard monetary amounts for the incentives is particularly noticeable. During his campaign, however, Fenty indicated strong support for such incentives, which means that he may oversee implementation in a manner favorable to the construction and development community. The incentive period for the act will run from Oct. 1, 2009 to Dec. 31, 2015. To qualify for the incentive program, a nonresidential private building must meet basic LEED standards from the beginning of the incentive period to Dec. 31, 2011. After that, such structures must reach the “silver” level of LEED certification, a more stringent standard. During the entire incentive period, residential private buildings need only meet the basic level of LEED standards. Much like an ordinance in effect in Arlington, Va., and other jurisdictions, the act offers an expedited permitting process for construction projects that have been pre-approved as having design plans that meet green-building standards. GREEN AND PRIVATE One big difference between this act and typical sustainable-building requirements in other areas in the United States today is the focus on new construction and renovation of private buildings. If enacted, the act will be the only one of its kind in major U.S. cities, and the District will join only a handful of small cities to mandate green-building methods for private endeavors. Beginning in 2009, all construction-permit applications submitted to the D.C. Department of Consumer and Regulatory Affairs will have to include documentation about what green-building elements a structure will include. For privately owned buildings, once such a structure receives a certificate of occupancy, it would have two years to fulfill green-building requirements. Beginning Jan. 1, 2010, all construction of buildings on property sold by the District or a District agency will have to meet LEED’s new-construction or “core and shell” standards. All nonresidential buildings and post-secondary education facilities will have to meet these standards as of Jan. 1, 2012, and after that date, all other educational facilities will have to conform with LEED for Schools or a similar benchmark, as determined by the mayor. One thing that is not clear from the draft circulated at the most recent public hearing for the act is how privately owned residential buildings will be treated. Section 7 of the Act, which contains the private-building requirements, purports to apply green-building requirements to “all new construction or substantial improvements of a privately owned building,” yet it does not state when residential facilities would begin to face green-building scrutiny. Also, because buildings of less than 50,000 square feet are exempt from the Section 7 requirements, single-family homes, town houses, and small multifamily developments would be exempt in any event. Although the private-building requirements make up the more unusual aspects of the act, its application to public projects is even more extensive. Covered public projects include “new construction and substantial improvements” to buildings owned by the District or a District agency that are initially funded in the District’s 2008 budget and thereafter, built as a result of a property disposition in which public property is leased to private entities, or publicly financed for at least 20 percent of the total construction cost in fiscal year 2009 or later. The public-project requirements also apply to improvements completed “to meet the needs of tenants.” These public projects would have to meet the LEED Silver standard and attain a minimum rating under the Energy Star program, which is a federal government performance-rating system for energy efficiency. Public residential buildings having at least 10,000 square feet of gross floor area would have to meet the “Green Communities” standard, a set of criteria promulgated by the Enterprise Foundation, which works closely with the Natural Resources Defense Council. Developers and builders should note that even though a building may be used for private, commercial purposes, it may be required to meet standards for public buildings if it is on District-owned land. Those involved in leasing space to the District should also be aware that as of Oct. 1, 2008, the act also grants priority in the city’s leasing decisions to buildings fulfilling LEED’s new-construction and core-and-shell criteria. Even if the act in its final form includes all these provisions, it is unclear how it would be implemented. Much depends on the decisions of the Fenty administration. The act states that if there is a conflict between the existing construction code and green-building practices, green-building practices take priority. But the act also provides that existing construction codes can take priority if the DCRA director determines that using green-building standards “would not serve the public interest.” Another question is how compliance would be monitored. The mayor is given the task of ensuring compliance, and he may do so through the D.C. government or through third-party entities, but it remains to be seen whether the District can create an effective bureaucracy to administer a program based on third-party standards. Finally, of course, there is the question of how to fund the incentive and oversight mechanisms. All applicants for incentives or permits for private projects falling under the purview of the act (for private projects, beginning on Jan. 1, 2012) would have to post a performance bond, an irrevocable letter of credit, or an escrow account in an amount equal to 2 percent to 4 percent of the total project cost, depending on the size of the building. If a project does not meet the act’s standards within two years of receiving a certificate of occupancy, the District would be able to draw on the funds deposited or the letter of credit. In addition to the upfront bond, letter of credit, or escrow deposit, the District also will begin collecting a “green building fee” as of the date the act takes effect, which is much earlier than the point at which the act’s incentives and regulations come into force. For new construction, there will be a surcharge of $0.002 per cubic foot in addition to applicable construction-permit fees. For alterations and repairs, the fees are based on construction value, with construction values from $1,001 to $1,000,000 carrying a 0.13 percent surcharge and those more than $1,000,000, a 0.065 percent surcharge. There are exemptions from the act for “compelling circumstances as determined by the mayor by rulemaking.” And another exemption exists for “practical infeasibility”; the burden, however, is on the applicant to show hardship or infeasibility. Whatever the precise final language of the act turns out to be, it’s clear that decision makers in the all-important D.C. real estate and construction industries must now become familiar with the new world of “green.” What’s more, in view of the current political climate and concerns over energy costs and shortages, it is likely that other area jurisdictions will follow the District’s lead. This trend is here to stay.
Mark Polston is an associate in the real estate development practice group in the Washington, D.C., office of Womble Carlyle Sandridge & Rice.

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