But, Connecticut law does allow electrical cooperatives, which “may be organized . . . for the purpose of generating electric energy by means of . . . renewable energy resources.” With the input of the state’s Clean Energy Fund, Becker formed a co-op called the Elm Electrical Cooperative, Inc., and approached United Illuminating (the local utility) about organizing a net metering arrangement. Absent DPUC’s consent, the utility refused. Becker proceeded to file another petition that requested, among other relief, that UI be ordered to power the co-op, that the co-op be eligible for energy conservation and incentive programs, and that the co-op be able to implement Becker’s proposed net metering program. Earlier this month, DPUC rejected Becker’s petition (the written report on which the decision was based does not appear available on DPUC’s website).

In its article, the Courant makes several points which I think are worth repeating here at GRELJ for your consideration. First, according to the Courant, DPUC suggested both in its report and oral hearing that although Becker’s proposed solutions are novel, the agency itself needs input from the legislature on how it should respond. Connecticut is behind other jurisdictions (including New York) in terms of net metering legislation; I think this is a good example of technology bumping up against an antiquated regulatory regime. Legislation needs to enable – and not restrict – technologies that can improve building performance. A thought that follows is how quickly many state and municipal governments have acted to incorporate third-party building rating systems into legislation without fully considering (1) the corresponding legal implications; or (2) whether those rating systems actually result in higher performing buildings. We’ll be keeping an eye on 360 State Street’s plight and follow up if anything else of import transpires.

On a New York side note, last August Governor Paterson signed a series of bills to allow commercial net metering installations across New York State. Previously, only residential users were allowed to generate their own electricity from renewable sources and sell it back into the grid. Senate Bill 7171 now allows net metering for commercial systems up to 2 megawatts in capacity. It also increased the maximum system size for residential installations from 10 to 25 kilowatts. In addition, for building owners that install solar power systems, Senate Bill 8145 (which applies only to New York City) allows for a four-year real property tax abatement of up to $62,500.00 per year. As we noted recently over at gbNYC, the first such commercial installation in New York City was recently commissioned at 925 Bergen Street in Brooklyn by solar power installer Solar Energy Systems (SES) for Big Sue LLC, a general contracting and consulting firm that specializes in green design-build projects, which owns and operates the property. The installation is a 40 kilowatt solar array and, according to SES, is the largest commercial net-metered photovoltaic system in the entire country.

Back in August, you may recall that Community Solutions executive director Pat Murphy authored the first piece of a three-part survey titled “LEEDing from Behind: The Rise and Fall of Green Building,” which we noted here at GRELJ. Our article pointing you to the piece generated quite a bit of commentary and, now that Mr. Murphy has completed Parts 2 and 3, we thought we’d point you to his new book compiling the survey which is titled “The Green Tragedy: LEED’s Lost Decade.” The book was released while I was away last month and builds on Part 1 by tracing the historical argument promoting minimal green building cost premiums, reviewing the ongoing marketing efforts behind LEED, and concluding that policy makers should demand energy efficiency standards more akin to the German Passive House rather than “cheap quick ‘green’ solutions.”

Interestingly, in the preface, Murphy observes that “[w]e are now faced with a movement to adopt LEED as part of our building codes. An over-marketed standard that is under serious attack for its poor energy performance is now being proposed and accepted by cities as a requirement for our buildings. The idea of accepting as law an inadequate standard that has been developed by the building industry – thereby allowing that industry to usurp the long-established methodology of setting building standards by government policy- is absurd and dangerous.”

In addition to their significant legal implications, these remarks resonate with the conclusions of the recent NIBS report and, in my opinion, portend the types of critiques I believe we will see more forcefully in 2010 if LEED buildings do not perform at a statistically higher level under Version 3.0. Mr. Murphy’s book is available here, and I look forward to continuing the robust discussion that emerged after we noted Part I here at GRELJ in the comments below.

• The Green Tragedy: LEED’s Lost Decade

First, with respect to building performance, the report notes that “[t]here is very limited data that correlates verifiable improvements in building performance with building rating/certification system requirements. Many people view the few data sets that do exist as controversial in terms of methodologies and conclusions drawn from them.” It also observes that “[t]here are growing concerns that the implied guarantee of building energy performance emanating from building rating/certification/labeling systems may confuse or mislead policy makers and the public.” The controversial USGBC-backed New Buildings Institute study- whose conclusions continue to be cited in support of LEED building performance claims- could certainly be the partial genesis of these remarks.

In terms of green building legislation, the report also emphasizes a number of important points, noting that “[e]lected officials and policy makers at the federal, state, and local levels only rarely understand the objectives, development, intended uses, opportunities, and limitations of rating/certification programs for buildings and accreditation programs for individuals.” Moreover, the report argues that “[a]t an increasing rate, state and local governments and their code/regulatory agencies are adopting building rating / certification systems, intended as voluntary systems, to be their code or regulatory requirements, often without fully understanding their benefits, tradeoffs, and costs.” These remarks comport with the notion that many state and local governments have rushed to legislate in knee-jerk fashion, failing to analyze or review  corresponding legal implications; the AHRI v. City of Albuquerque litigation, for example, is illustrative here.

Perhaps most significantly, the report levels a heavy-handed critique at the organizations which promulgate green building rating systems, stating that “[m]any of the building rating/certification systems and individual accreditation systems appear to place the goal of generating revenue for their development organization as a goal equal to the organization’s commitment to knowledge development and advocacy around its issue,” and that such systems “appear to certify expertise in applying the program more than improving the actual building’s performance.” With respect to that expertise, the report acknowledges “a growing concern that individual accreditation programs are not based on rigorous criteria and testing that validate competence.” Note here that no single system was identified in the body of the report, though I’m curious whether these remarks will elicit any response from USGBC or other organizations.

In terms of legal risks arising out of green building projects, the “Owner Expectations and Professional Liability” section of the report acknowledges many of the types of risks which have been discussed here and elsewhere over the past year. For example, the Task Group notes that “design and contractor liability risk may rise if performance expectations are not realized in completed projects” and that rating systems and accreditation programs “are beginning to impact the professional standard of care recognized by law and the building community. Such systems and programs may cause design professionals, owners, managers, and facilities personnel to be held to higher degrees of expertise and performance.”

A shifting standard of care being fueled by green building practices is a critical issue that we have discussed frequently at GRELJ, and it’s important for design professionals to note that NIBS specifically identified it in the report. The Task Group also discusses green building insurance claims, noting that “[t]he vast majority of insurance claims involve misrepresentation, miscommunication, and misunderstood expectations between owners and design and construction professionals.” This remark reminded me of a BIM/green building panel held here in New York City nearly two years ago where a number of insurance industry professionals warned that claims- in the green building space or otherwise- always start with violated expectations.

The Task Group concludes the report with a set of recommendations to NIBS moving forward, which include encouraging the A/E/C community to “support one comprehensive, consensus-based building rating or certification or labeling program to reduce the complexities and contradictions that currently exist” and the development of various white papers that analyze the foregoing points in greater detail. As you may know, NIBS is a non-profit organization that was founded in 1974 by act of Congress; 6 of the 21 members of its Board of Directors are appointed by the President and approved by the Senate. Given NIBS’ backing and the scope of the Task Group’s conclusions and recommendations to the Board, its release of this report could mark the beginning of a serious uptick in the level of analysis being performed in this area.

You can download the report through the link below. I look forward to your thoughts and reactions in the comments.

• Report on Building Rating & Certification in the U.S. Building Community (NIBS)

Although the study concluded that these 19 green buildings were consuming (on average) 40 percent more energy than predicted, all of the buildings were consuming less than a building designed to Massachusetts baseline building codes. The disparity in predicted versus actual energy consumption is probably not surprising, but the study did identify a number of issues common across the buildings which resonate with many of the technical and operational provisions of documents like the Model Green Lease. I think it is therefore worthwhile to review the study both from a green leasing perspective, but also in terms of LEED, particularly because the Lowell study has not been referenced in many of the recent articles discussing the ongoing LEED performance gap.

Among other factors, the study identified the following as accounting for the disparity in predicted versus actual performance:

• The predictive energy models used during the design phase were created based on the incremental amounts of projected energy savings from each of the proposed systems and efficiency measures which, according to the energy modelers interviewed for the study, did not account for the building’s performance in its entirety once those systems were installed and operational;

• By nature, predictive energy modeling does not account for the behavior of building operators and occupants with respect to their use of plug loads, occupancy levels, and operating hours (but note the importance of green leasing practices in this context);

• Design and materials changes during the construction phase on account of budget constraints (which emphasizes the need for ongoing construction counsel); and

• Some of the buildings suffered from increased energy consumption during the initial months of occupancy due to incompletely installed or commissioned systems, which the study concluded stemmed from contractors who incorrectly set the systems initially, as well as occupants who did not understand how to use the systems.

In addition to suggesting that these specific design and construction factors may impact green building performance, I think it is also important to note that the authors identified a “frustration” in stakeholders over the observed energy performance gulf. The study suggests that the gap be bridged through “communicating uncertainties in design predictions” and “better training in the use of the technologies in the buildings;” the former is a marketing and construction contracts issue which we’ve frequently discussed in the context of LEED, while the latter can be addressed through the use of various types of green lease provisions.

Although the study itself is somewhat dated, I do think that it emphasizes two important points. First, LEED building performance has been a question mark for quite some time, and will likely remain a critical issue for the foreseeable future, particularly while industry stakeholders continue to grapple with addressing the foregoing building performance factors through risk management strategies, construction contracts, and green lease provisions. Second, it confirms the unpredictable nature of energy modeling and importance for project teams to manage their clients’ expectations when discussing the opportunities presented by green building and other sustainable construction practices.

• Barrientos, J., U. Bhattacharjee, T. Martinez, and J. Duffy, 2007, “Green Buildings in Massachusetts: Comparison between Actual and Predicted Energy Performance,” Proceedings Annual Meeting American Solar Energy Society

As you may know, among other provisions, the San Francisco green building ordinance requires commercial and residential projects greater than 25,000 square feet, or taller than 75 feet, to earn a LEED Certified rating from USGBC. The requirement for commercial projects increased this year to Silver and, in 2012, to Gold. Residential projects must earn a Silver rating beginning in 2010. Notwithstanding these phased requirements, in the Chronicle piece, the San Francisco Department of the Environment’s private sector green building coordinator Richard Chien states that “[w]e need to reconvene the task force that recommended the legislation and makes some revisions way before 2012. With the changes coming along [to LEED] we could be out of date and we need to address that.”

Interestingly, the San Francisco ordinance (No. 180-08 of September 4, 2008, codified at Chapter 13C of the local building code) states that “[w]herever specific LEED prerequisites or credits are cited, such references are to LEED-NC Version 2.2. More recent LEED . . . versions may be used, provided the credits and points achieved are as or more stringent than LEED-NC Version 2.2.” In other words, because the LEED 2009 MPRs are not referenced specifically, it’s not entirely clear whether they are included within the purview of the ordinance, particularly with respect to mid-sized commercial buildings which are only required to comply with certain LEED credits.

The introduction to the article is therefore inaccurate; San Francisco is not reconsidering whether to restructure its green building ordinance around something besides LEED based on perceived LEED building performance failures. Rather, it is evaluating if, as presently drafted, and based on the recent amendments to LEED in the form of LEED 2009, its ordinance will still (1) obligate covered projects to comply with the new MPRs and share performance data; and (2) whether the ordinance should be revised to expedite that requirement. This is precisely the type of scenario that has been suggested both here at GRELJ and elsewhere with respect to the potential consequences for state and local governments that incorporate LEED into legislation by reference. Notwithstanding its performance-related issues, LEED itself continues to be a moving target and policymakers must guide themselves accordingly when considering the merits of this type of legislative activity.

I also think the Chronicle article is noteworthy because it suggests- once again- an overarching perception that simply collecting an increased volume of building performance metrics will solve the LEED performance gap. For example, consider the following quote from architect Jennifer Devlin of San Francisco-based firm EHDD: “LEED has done an exceptional job of raising awareness. And the U.S Green Building Council recognizes that tracking energy use is vital to the sustainable building movement.” LEED has unquestionably raised public awareness about the environmental impact of the built environment and put building performance on the front page of major media outlets such as the New York Times and the Chronicle. But, as USGBC’s Building Performance Initiative and other efforts ramp up this fall, I think it is critical to keep in mind Larry Spielvogel’s thoughts from our last article here at GRELJ that the question of improving building performance is highly complex and clearly one that cannot be solved by simply compiling a longer spreadsheet.

• Green Building Standard Seen as Flawed (SFC)

The reductions are staggered between 2010 and 2013 and beyond (10 percent through 25 percent, though the benchmark against which those reductions are measured is not set forth in the pending bill); Energy Star ratings would increase from 55 in 2010 to 75 in 2013 and beyond. An independent consultant would determine whether the required energy reduction is met; if not, the contractor (or, interestingly, another entity warranting the energy use) will be responsible for reimbursing the city for the cost of the excess energy use. The amendment is BL2009-503; a vote is slated for later this month. “This would allow an alternative that focuses on the performance of the building, not on the process of how you got to that performance,” Dominy told the Tennessean.

The genesis for the amendment is a 16-classroom addition to Antioch’s middle school, which uses an HVAC and building envelope system that does not qualify for credits under LEED (though it’s unclear exactly why this is the case). The contractor which designed and installed the system- Energy Systems, Inc. of Cookeville, Tennessee- is owned by Bob Southerlan, a former aerospace engineer who is “worried about being knocked out of the Metro construction market.”

I think that this is a critical battle to watch as it may suggest that local governments are coming to view LEED as something less than the mark of building performance; Mr. Dominy’s thoughts about process versus performance are particularly noteworthy in this context. It also echoes some of the remarks in the comments to Pat Murphy’s recent article as presented here at GRELJ (i.e., Mr. Murphy himself noted that “[t]here is a crying need for accurate, verificable and reliable energy rating systems. If LEED doesn’t fill the bill, other options will come forward.”) In addition, if it is true that Southerlan’s system is somehow excluded from the purview of LEED, there may be other, more serious problems with Nashville’s legislation from an antitrust perspective, which we’ll get into in a subsequent article.

• Nashville’s Green Building Code Under Review (Tennessean)

However, I think it’s important to look at the specific language that provides for decertification in LEED 2009, which reads (in part) as follows: “certification may be revoked from any LEED project upon gaining knowledge of non-compliance with any applicable MPR.” (emphasis added). The way I read this language, USGBC/GBCI is not obligated to revoke certification upon learning of non-compliance, but it is not restricted from receiving information regarding non-compliance from any third party. The question then becomes what, if any, obligations USGBC/GBCI may have to use that information and pursue a decertification proceeding, either conferred elsewhere in the LEED rating system itself or otherwise imposed by law. I don’t know the answer to that question, but perhaps Ujjval or others could chime in below in the comments. I think this is an absolutely critical point to dissect.

Also of import in the ENR article with respect to the MPR requiring access to building performance data (which has been the MPR driving much of the risk discussion here at GRELJ and elswhere), Duane Morris construction attorney Ed Gentilcore emphasizes that “[w]hat was once an initial project-performance milestone now has ongoing tail responsibilities that could create extended obligations for the owner itself and possibly, in turn, design and construction teams.” In addition, Scot Horst told ENR in the same article that the organization is “still developing the best and easiest ways to help owners do this. This is a new requirement and there is a lot to work out over time.” He declined to tell ENR when any addenda to the MPRs might be released.

I think it’s clear that the contract challenges and corresponding risks associated with the new LEED 2009 MPRs are just begin to emerge, particularly if USGBC and GBCI release a second addenda to a document that was just released a few months ago.

• Building Rating System Requirement Raises Concerns (ENR)

Specifically, while the new Stadium was projected to more or less play the same as the old one across the street, a number of factors that the Yankees and their design team may not have considered, underestimated, or were outside of their control all along have resulted in a drastically different performance than the club anticipated. For example, the new Stadium stands sixty feet taller and concourses on each level of seating are exposed to the building’s exterior, which may be creating a wind tunnel effect that is blowing baseballs out towards the fences. Interestingly, the Yankees and their engineers are not entirely certain about what will happen to these wind patterns once the old Stadium is razed as demolition has yet to start in earnest.

The analogy here, of course, is where policymakers, owners, or other stakeholders make legislative or project-related choices that are based on projections which do not accurately reflect actual performance once a structure is brought online; these dangers are even more acute where contract documents obligate a project team to achieve a certain level of performance or fixed reduction in operating expenses that are based on a predictive model. The reasons why a building’s performance could diverge may be complex and entirely unanticipated by stakeholders; building science is complicated and buildings themselves are complex systems for which modeling does not always reflect reality. The experience at New Yankee Stadium to date may be a rather simplistic example, but I do think it helps make the point that predicting performance and evaluating performance based on actual data are two very different ballgames.

The station first interviewed a number of Washington’s larger school districts, who reported their experience to be a green building premium between 3 and 7 percent, not the 2 percent claimed by the state. In the video, a Spokane School District spokesman states that one particular elementary school in Lincoln Heights would save $40,000.00 annually in operating costs. KING 5 followed up by interviewing this same spokesman, who said that this amount was an “incorrect projection” and the school is actually saving around $15,000.00. Finally, the video contends that “[o]ne California district has seen scores increase close to 30 percent in buildings with abundant daylight. While other districts may see increases of lesser magnitude, the conclusion is still the same: better light equals better scores.” KING 5 reports that this claim is “based on just one study done by a California architecture consulting firm ten years ago. WASL scores [that the station] looked at from three local schools did not show any noticeable improvement once the students moved into a new building.” This last point is particularly interesting to note given the weight that many green building advocates accord to the alleged soft benefits of sustainable design (i.e., increased worker productivity, reduced absenteeism, etc.). According to the station, representatives from the state refused to appear on camera with KING 5 to discuss the results of its report.

I think KING 5’s investigation suggests a number of important points that have been discussed previously here at GRELJ, both in prior articles and in the comments. First, as we move forward through this horrible economy, claims about projected green building performance and the benefits associated therewith that are used to buttress support for state- and local-level policymaking will be viewed with heightened scrutiny, particularly where taxpayer dollars may be used to fund such programs. Second, questionable performance issues with respect to green buildings will continue to demand strong contract language for all construction stakeholders, as well as carefully crafted marketing or other materials representing a property’s green design features and projected operating expenses. Finally, if other major media outlets follow KING 5’s lead in terms of investigating green building claims made by public entities in support of legislation, it could go a long way towards disseminating better performance data and, in turn, drive projects to achieve the higher efficiences and lower operating expenses that every industry stakeholder is pushing for.

• Investigators: Green School Claims Oversold (KING 5)

In his opening remarks, Mr. Gifford discussed both his problems with the LEED system generally, as well the basis of the critiques in his paper. “The first study we heard was in ‘07, and even before that, it was becoming law. The study came out and said that LEED-rated buildings save 25-30 percent compared to a national database. Well, I did a radical thing. I read the study, and I think there’s nothing in the study that supports, related to, or even references the conclusion. I think the conclusion was invented and stuck on. They found a 24 percent difference between two numbers, mean energy used by the national database and the median of the LEED buildings. Mean to mean would have shown that LEED did 29 percent higher.”

Mr. Owens responded by agreeing with Mr. Gifford that “before this research was done, there was a leap of faith involved, but the characterization of this as a scandal and a con is really unfortunate. I’ve never found anyone other than Henry saying that these buildings are using more energy. LEED is an assessment of potential for a building to perform. That’s all it is. We could do better to educate the public that the model isn’t good enough, yet. We haven’t really gone through and said ‘this is the first step in a 6 or 7 or 8 step process.’”

Fred Unger, a former board member of NESEA, challenged Mr. Owens and USGBC from the floor “to commit to not putting LEED or USGBC on any legislation” and called it a “scandal” that “LEED is being put into building codes when it still has these bugs to work out.” Mr. Owens responded by saying that although “the USGBC has never advocated putting this into law, it’s not the best use of this rating system.” According to Mr. Prager, Mr. Owens said USGBC would not make that commitment to keep LEED out of any legislation. He did, however, state that perhaps USGBC should have been more of an advocate in terms of articulating that LEED was not meant to be used as a legislative tool. Just as a side note, as recently as approximately one year ago, USGBC did have a statement on its home page that LEED was not intended for adoption into legislation or local building codes, but I am not certain whether it’s still there in any capacity or not.

I think it’s important for USGBC to engage building scientists like Henry Gifford at events such as these and, for that, I give it and Brendan Owens credit for attending the NESEA forum; indeed, one of the major disappointments of this past year’s Greenbuild event was USGBC’s failure to acknowledge LEED performance failures and other risk implications of building green. In a post at gbNYC that discussed the event, I wrote, with respect to building performance, that “[m]obilizing the industry is important, and creating green good will is great too, but I think the USGBC is missing a big opportunity here by not embracing these types of leaders who can help improve the energy performance of our buildings- we can’t lose sight of that ultimate goal.” Hopefully that’s what’s beginning to place here.

I also think it’s encouraging that green building performance issues are beginning to receive more media attention, particularly in the context of LEED. If anything, the NAIOP study and Henry Gifford’s ongoing efforts have stakeholders on both sides of the aisle considering the merits of predictive energy modeling more vigorously; hopefully that debate will continue as USGBC prepares to release its LEED 2009 system. In the interim, the construction and real estate attorney’s role in the context of building performance will continue to be- as Mr. Owens hinted at during the NESEA panel- educating clients that the LEED model “isn’t good enough, yet” and may present liability implications that they have not previously had to consider.

I am certain there will be much more to say about both this forum and the NAIOP study in the coming weeks and I look forward to hearing your thoughts and reactions in the comments below. I also encourage you to check out the comments to BuildingGreen.com’s article discussing Mr. Gifford’s “Lies Damn Lies” paper, where folks like Fred Unger, Rob Watson, and Mr. Gifford himself have left a tremendously interesting series of responses which I think that you’ll find to be quite insightful.

• Lies Damn Lies (BuildingGreen.com)
• LEED Controversy (Michael Prager)