Code green: Prepare your company for sustainable building requirements

Many of us think of modern buildings as fairly benign. They don't visibly spew fumes into the sky or create noxious byproducts. But, in fact, buildings do have a profound impact on the environment.

By some estimates, buildings in the United States are responsible for 65 percent of electricity consumption, 39 percent of greenhouse gas emissions, 36 percent of all energy use and 30 percent of waste output. Buildings also consume about 12 percent of our potable water—amounting to 15 trillion gallons per year.

In recent years, a number of environmentally forward groups have developed voluntary initiatives designed to mitigate these impacts. Companies seeking to reduce environmental impact of the built environment now have guidelines for going green.

Building certification standards provide guidance

The prevailing standard is the Leadership in Energy and Environmental Design (LEED) program created by the U.S. Green Building Council. The LEED system awards points for a variety of elements in construction, design and, in some cases, operation. Projects are designated as certified, silver, gold or platinum based on the number of points achieved. The Green Globes program, developed by the Green Building Initiative, is an increasingly popular online program that is similar to LEED.

For a variety of reasons, including cost savings and the "halo effect" associated with being green, such initiatives have become widely adopted without being legally mandated. But the mandates are coming.

Regulators moving toward mandatory green construction

Several states, including Minnesota, have laws requiring that buildings constructed with public dollars incorporate green practices into design and construction. Legislation authorizing the new Minnesota Twins stadium, for example, requires that the ballpark receive LEED certification.

Many cities—Los Angeles, Dallas, San Jose, and Boston among them—have adopted sustainability requirements into their building codes. Seattle now requires that all new construction achieve LEED silver status.

The entire town of Greensburg, Kansas, which was destroyed by a tornado in 2007, has gained national attention by seeking LEED platinum as it rebuilds. Considering there are only about 80 LEED platinum buildings in the entire country, this is an extraordinary undertaking.

Expect green construction to gain momentum

Since these trends show no signs of slowing, what does a savvy in-house lawyer need to know about building green?

If sustainable building practices are not mandated in your community, assume they will be soon.

Investment in real estate assets for business operations tend to be expensive and long-term, so it's important to try to take future needs into account. While it's difficult to predict how various governmental authorities will approach the greening of building stock within their jurisdictions, it's reasonable to expect some retrofitting requirements for remodeling and expansion projects—and possibly even for sale.

Adopting voluntary green building practices now may avoid costly mandatory retrofitting in the future. And your company may also benefit from reduced energy costs during its occupancy.

Explore sustainable building practices in ALL projects.

Originally, LEED certification was limited to new construction. However, the Green Building Council has recently created a LEED program for existing buildings. Recognizing that little can be done to alter design and construction materials with existing buildings, this program focuses on operation and maintenance. Even if your company is contemplating only a minor project in an existing building, making the project green may make sense.

Leased sites require special consideration

If you are trying to incorporate sustainable building practices into a leased site, you will need the cooperation of your landlord. If you are in a multi-tenant building, you may need cooperation of other tenants as well.

Make sure your lease fully allocates application and certification responsibilities between landlord and tenant. Is achieving a certain LEED rating a one-time event or an ongoing obligation? Which party has that obligation? Does the operating expense language in your lease allow the tenant to capture the cost savings of reduced energy consumption? Does the landlord share some of the costs?

Green certification is a moving target—make sure to pin it down

Green technology is constantly changing, and groups that evaluate green building initiatives frequently update their programs to keep up. Take care to avoid ambiguity in drafting agreements. For example, if you want to compel your landlord to achieve LEED certification in your lease build out, the lease should specify the level required (certified, silver, gold or platinum), and tie certification to a the existence of a version of the relevant standard at a particular point in time.

Consider buying additional property insurance

At least one insurance company offers a property insurance product specifically tailored to LEED and Green Globe certified buildings. In the event of a covered loss, this product would provide insurance for recommissioning or recertification fees (including additional fees required to certify at one level higher than before), vegetative roofing systems, debris recycling and the use of green-certified products. It also provides funds to rebuild a conventional building to a green standard.

Consult with experts

Many professionals, including architects, contractors and lawyers, are well-versed in LEED and other green building initiatives. Whether you are working on your first green project ever—or your first project in a while—people who specialize in this area can likely add value to the process. Take advantage of their expertise and knowledge of new developments.

Prepare for next phase

In just a short time, we have seen green building evolve from offbeat idea to trend to best practice. Legislative requirements for reduced environmental impact are fast approaching. And public demand for green construction is growing, as well. As in-house counsel, you are positioned to brief company leaders on likely regulatory and legal changes in this area.

Preparing your company for tougher green construction requirements now will help avoid expensive, time-consuming measures later.