Back in November, City Planning Commissioner Amanda Burden announced that her office would be proposing amendments to the New York City Zoning Resolution, which dates from 1961. Last week, the Commission released the text of the proposed revisions, which it is calling the most comprehensive effort of any U.S. city to “remove zoning obstacles to the construction and retrofitting of green buildings.” Drafted in cooperation with Mayor Bloomberg’s Green Codes Task Force, officials are projecting that the initiative could unlock over $800 million annually in local energy savings.

“Zone Green,” as the revisions are being called, would permit solar panels, green roofs, storm water systems, skylights and other green features on New York City buildings, despite existing restrictions within the 1961 code. They would also permit owners to install wind turbines up to 55 feet above rooftops on waterfront buildings and buildings taller than 100 feet. (Free standing turbines would be permitted on waterfront blocks in commercial and manufacturing areas.)

Specifically, Zone Green would also:

• Exempt external building insulation from floor area requirements, allowing existing buildings to add insulation within their property lines;
• Eliminate penalties for high-performance envelopes in the way floor area is measured, by exempting a portion of thicker, better insulated walls from floor area calculations when buildings substantially exceed the New York City Energy Conservation Code;
• Allow solar panels to be installed on any building roof, by allowing them as a “permitted obstruction” above the corresponding height limit;
• Allow sun control devices (i.e. shades or screens) to project from building facades over required open areas;
• Accommodate a broad range of rooftop green features, including green roofs, wastewater management equipment, boilers or cogeneration facilities, and recreational decks; and
• Encourage local food production by allowing a waiver of floor area and height limits for greenhouses on top of non-residential buildings.

The full text of the proposed amendments – which are available for your review here – will now begin its march through the public review process (i.e., referral to all 59 Community Boards, the five Borough Presidents and Borough Boards, and review by the City Council and full City Planning Commission), which should take six months. They join the Greener Greater Buildings Plan (four New York City-specific pieces of green building legislation, which we’ve noted previously) and the work of the Green Codes Task Force (111 recommendations to green New York City’s building code, 38 of which the City Council has enacted to date).

1. San Francisco
2. Midtown New York City
3. Washington, D.C.
4. Midtown South, New York City
5. Los Angeles
6. Boston
7. Downtown New York City
8. Portland
9. Seattle
10. Oakland

New York City’s Midtown, Midtown South, and Downtown submarkets cracked the top ten, placing second, fourth, and seventh, respectively in the Index, which (among other goals) aims to assist urban planners and policymakers in examining data to understand what new policies and incentives may be useful in accelerating green building practices at the local level.

Specific rankings (again, out of 30 markets evaluated) within each of the Index’s six categories for New York City’s submarkets are:

• Midtown: 3rd in office market conditions; 3rd in investment potential; 5th in green adoption and implementation; 4th in mandates and incentives; 9th in state energy initiatives; and 3rd in green culture.

• Midtown South: 2nd in office market conditions; 2nd in investment potential; 25th in green adoption and implementation; 3rd in mandates and incentives; 8th in state energy initiatives; and 2nd in green culture.

• Downtown: 7th in office market conditions; 7th in investment potential; 20th in green adoption and implementation; 6th in mandates and incentives; 10th in state energy initiatives; and 4th in green culture.

Some of these individual rankings may seem somewhat inconsistent to you (for example, every new commercial office building at the rebuilt World Trade Center site will be LEED Gold-certified, which makes Downtown’s ranking for green adoption and implementation seem unfair). But a closer review of the 10-page national overview should provide some context and clarity to the bare statistics referenced above.

This year’s Index also – for the first time – separately profiled 2 of the top 10 markets, including Midtown Manhattan, in significant detail. The Midtown Profile Report analyzed a variety of factors specific to the Midtown submarket, including general and green office market statistics, major leasing transactions, and a review of the submarket’s LEED-certified and Energy Star-rated commercial office buildings. We’ve reviewed the Report and, below, present some of its conclusions for your consideration in order to suggest some anecdotal conclusions about the state of the Midtown market vis-a-vis green.

Overall Market Inventory & Investment Outlook

Manhattan is the country’s largest office market with a total of nearly 393 million square feet of inventory. 241 million square feet of that space is located in the Midtown submarket. In Midtown, 20.3 million square feet of that space is LEED-certified (8.4 percent of total inventory) and 50.3 million square feet of space is Energy Star-rated (20.9 percent of total inventory). We expect these figures to continue growing. More energy efficiency initiatives will be enacted under the Greener, Greater Buildings Plan, ultimately driving down learning curves and costs of compliance. And large owners and operators like Vornado, SL Green, Durst, and Malkin are likely to remain committed to greening their portfolios.

LEED-Certified Commercial Office Buildings

According to the Report, there are currently 28 LEED-certified commercial office buildings in Manhattan, which total 24.1 million square feet of space. 23 of those buildings are located in the Midtown submarket and constitute 20.3 million square feet of space. 18 of those 23 buildings are certified under the LEED for Existing Buildings rating system; 5 buildings under LEED for Core and Shell.

So far in 2011, the following 9 properties in the Midtown submarket have earned formal LEED certification from USGBC:

• 900 Third Avenue (LEED-EB: O&M Gold; May 5, 2011; 515,200 square feet)

• 250 Park Avenue (LEED-EB: O&M Gold; May 5, 2011; 471,260 square feet)

• 125 West 55th Street (LEED-CI 2.0 Gold; April 20, 2011; 48,000 square feet)

• 909 Third Avenue (LEED-EB: O&M Silver; April 20, 2011; 1,125,000 square feet)

• Two Penn Plaza (LEED-EB: O&M Silver; April 19, 2011; 1,500,000 square feet)

• 1740 Broadway (LEED-EB: O&M Silver, April 8, 2011; 412,704 square feet)

• 11 Penn Plaza (LEED-EB: O&M Silver, April 7, 2011; 1,987,328 square feet)

• 1290 Avenue of the Americas (LEED-EB: O&M Silver, April 7, 2011; 1,987,328 square feet)

• 1120 Avenue of the Americas (LEED-EB: O&M v. 2009 Silver; February 23, 2011; 400,000 square feet)

Energy Star

99 buildings in Manhattan earned Energy Star accolades in 2010, and the total number of Energy Star-labeled properties has more than doubled since the last Green Building Opportunity Index was released in 2010. The Report identifies the Greener, Greater Buildings Plan as a major catalyst for the increase.

Midtown currently stands heads and shoulders above the other New York City submarkets in terms of LEED and Energy Star adoption, ranking 5th overall in the Index with Downtown and Midtown South trailing at 20th and 25th, respectively. While the Midtown South submarket lacks Midtown’s volume of Class A trophy properties that have almost uniformly pursued LEED-EB: OM ratings, we do expect Downtown to perform better in future Indices as the new World Trade Center towers come online.

Mandates & Incentives

This section of the Report starts by noting that “New York’s passage of the Greener, Greater Buildings Plan in late 2009 has already had a definitive impact on commercial office properties, as the number of Energy Star certified properties in Manhattan has more than doubled since the last iteration of the Green Building Opportunity Index a little over a year ago.” Specifically, it focuses on the first private sector phase of the Greener, Greater Buildings Plan: the benchmarking law that is requiring all residential and commercial owners of buildings larger than 50,000 square feet to benchmark their energy and water usage against 2010 results. The Report also points to two public initiatives that we’ve yet to discuss here at gbNYC:

• Back in March, Con Edison announced that Lockheed Martin would run its Industrial Energy Efficiency Programs, which provide cash rebates and incentives to facilitate reduction in gas and electricity usage by its commercial and industrial customers. Thus far, more than 250 applications have been received which are generating over $3 million in rebates and incentives for Con Ed customers.

• Second, NYSERDA’s Focus on Commercial Real Estate Program (FOCUS CRE) is another program we’ve yet to note at gbNYC. The program provides building owners with a variety of strategies to assist them in assessing various performance factors, including energy consumption, efficiency, and how costs and savings will accrue to the owner as opposed to tenants. It’s a great resource for owners and tenants alike that are interested in greening their leasing practices.

Finally, we were also pleased to note that the Report identified Mayor Bloomberg’s Green Leasing Language in this section, as well as the city’s commitment to including the language in all new leases in which the city is a tenant.

Overall, Midtown ranked second among the thirty markets surveyed (behind Washington, D.C.) in the Mandates & Incentives category.

Green Culture

The Index’s Green Culture category seems inherently more subjective than the others. Nevertheless, Midtown ranked first in the Transit Ridership and second in the Walk Score subcategories that were used to produce each submarket’s overall Green Culture score. According to the data that the Index pulled from SustainLane, “New York City’s per capita emissions are a third of those in the rest of the country because of public transit use, densely packed buildings, and smaller homes.” SustainLane is a peer reviewed study whose results, factors, and methodologies are available here.

Final Thoughts

Ranking cities in the Green Building Opportunity Index is an important step towards promoting competition and improvement among the 30 markets that participated. We’re pleased that New York City has performed so well thus far, but work remains if Gotham is to be as successful in 2012. For example, we hope to see both Midtown South and Downtown improve in the number of Energy Star-labeled and LEED-certified buildings. But as the Report notes, the Manhattan office market “is one of the healthiest in the country, with investor demand in core central business district markets continuing to put upward pressure on property values.” As the commercial real estate climate continues to – hopefully – improve into 2012, we do expect New York City to fare just as well in next year’s Index. What we do hope to see regardless are detailed Profile Reports for the Downtown and Midtown South submarkets, which could identify specific green pressure points within each local submarket.

Again, a fully copy of the Midtown Profile Report is available here for your download and review.

We’ll start with the Lighting Upgrade Law, which amends Chapter 3 of title 28 of the New York City administrative code (i.e. the Building Code) and adds articles 310 – Required Upgrade of Lighting Systems – and 311 – Installation of Electrical Submeters in Tenant Spaces.

Article 310 of the Lighting Upgrade Law requires owners of all buildings larger than 50,000 square feet to upgrade the building’s lighting systems to energy efficient systems that comply with the standards for new lighting systems set forth in Section 805 of the New York City Energy Conservation Code (“NYCECC“) by January 1, 2025. Section 805 is actually part of the part of the Energy Conservation Construction Code of New York, which sets standards for the energy performance of buildings throughout the State of New York. (NYCECC, which we will discuss in much more detail in a subsequent article here at GRELJ, incorporates the state energy code by reference). Section 805 covers lighting system controls, the connection of ballasts, the maximum lighting power for interior applications, and minimum acceptable lighting equipment for exterior applications, but specifically excludes lighting within residential buildings from its purview.

Required upgrades are accomplished pursuant to Article 310 by installing or modifying the lighting system to comply with NYCECC’s standards for new systems for the following lighting elements: (i) lighting controls (including interior lighting controls, light reduction controls, and automatic lighting shutoff); (ii) tandem wiring; (iii) exit signs; (iv) interior lighting power requirements; and (v) exterior lighting. Owners must file a report with the Department of Buildings prepared by either a registered design professional or licensed master or special electrician certifying that the upgrade has been completed and that the work is in compliance with the technical standards of the New York City electrical code.

Upgrades are not required for (i) an element of a lighting system that is already in compliance with NYCECC; (ii) lighting power densities in any space bounded by permanent floor-to-ceiling partitions and/or closable doors that are in compliance with NYCECC; (iii) lighting systems within low-rise residential units (R2 or R3) or spaces that serve such units, including, but not limited to, hallways, laundry rooms, or boiler rooms; and (iv) lighting systems within houses of worship.

In addition, Section 311 of the Lighting Upgrade Law requires that, by January 1, 2025, owners or lessors of commercial buildings that are larger than 50,000 square feet measure the electrical consumption of certain covered tenant spaces by installing submeters. “Covered tenant spaces” are (i) individual tenant spaces larger than 10,000 square feet on one or more floors; or (ii) a floor that is larger than 10,000 square feet which consists of individual tenant spaces that are let or sublet to 2 or more tenants. For the latter, each individual tenant space can have its own submeter, share a submeter with the other tenant spaces on the floor, or share one submeter that covers the entire floor.

From a green leasing perspective, although submeters must be installed as set forth in Section 311, the Lighting Upgrade Law does not require the landlord to apportion the cost of electricity among the building’s tenants or subtenants in any particular fashion. However, the landlord is required to provide each tenant or subtenant within a covered tenant space with a monthly statement showing the amount of electricity measured by the submeter for each tenant or subtenant during the month, and any amount charged to the tenant or subtenant for electricity. If the covered tenant space is a floor with multiple tenancies (as described above), and the tenant’s submeter covers other tenant spaces, the statement for that tenant must show the electrical consumption for the area covered by the submeter and the percentage of that area which is leased by the tenant. As Model Green Lease Task Force head Alan Whitson frequently observes, “what gets measured gets improved,” a mantra which is clearly the basis for this provision within Section 311.

Next we’ll take a look at NYECC and some interesting legal aspects of the legislation that are making some of Gotham’s building owners and facility managers nervous about what could be coming next from the City Council.

Although the costs of auditing were raised by opponents to the bills earlier this year, mandatory energy audits are now required every ten years, though buildings certified under LEED 2009 for Existing Buildings: Operations & Maintenance or which receive EPA’s Energy Star label are exempt. It’s this exemption that’s of particular interest to us here at GRELJ; here’s the pertinent text from the body of the bill:

No energy audit is required if the building complies with one of the following as certified by a registered design professional:

• The covered building has received an EPA Energy Star label for at least two of the three years preceding the filing of the building’s energy efficiency report.

• There is no EPA Energy Star rating for the building type and a registered design professional submits documentation, as specified in the rules of the department, that the building’s energy performance is 25 or more points better than the performance of an average building of its type over a two-year period within the three-year period prior to the filing of an energy efficiency report consistent with the methodology of the LEED 2009 rating system for Existing Buildings published by USGBC, or other rating system or methodology for existing buildings, as determined by the department.

• The covered building has received certification under the LEED 2009 rating system for Existing Buildings published by the USGBC or other rating system for existing buildings, as determined by the department, within four years prior to the filing of the building’s energy efficiency report.

Legislation which incorporates LEED into local-level legislation is something we’ve noted frequently here at GRELJ, and a couple of recurring issues immediately come to mind with Int. 967.

First, although the bill does allow buildings to earn certification under “other rating systems as determined by [DOB],” the bill does not provide any input on what those other systems might be, or how DOB will “determine” those that would qualify a building for the exemption. Does this language sufficiently address non-delegation doctrine concerns? (i.e., a private third-party organization is effectively determining whether an energy audit is unnecessary under Int. 967 by proxy).

Second, there is no language that allows the legislation to track changes in LEED; for example, if USGBC releases a next-generation LEED system subsequent to LEED 2009, what happens? We have noted this specific issue recurring in various types of legislation. For example, when we wrote about San Francisco’s decision to reconsider its LEED-driven green building ordinance, we pointed out that “LEED itself continues to be a moving target and policymakers must guide themselves accordingly when considering the merits of [LEED-driven] legislative activity.”

Finally, could design professionals balk at signing off on the energy audits given that LEED-EBOM is subject to the same Minimum Program Requirements which, if violated by the building owner, could result in a decertification proceeding, the consequences of which remain unclear?

These questions are obviously theoretical at this point and are designed to elicit your thoughts in the comments. However, I want to stress that the New York City legislation emphasizes the import of assessing and understanding LEED-related risks as the rating system continues to permeate into the private sector in a variety of legislative contexts.

Just as a side note for your reference, the other three bills that constitute the “Greener, Greater Buildings Plan” are:

• Int. 564: New York City Energy Conservation Code. Closes the “50 percent loophole” in the current New York City Energy Code, which does not require owners who renovate less than 50 percent of their building’s total space to comply with the most current – and energy-efficient- version of the Code.

• Int. 476: Benchmarking. Requires buildings to perform an annual assessment of their water and energy use using EPA’s Portfolio Manager tool for the purpose of comparing themselves with their peers, but exempts certain buildings for which public disclosure would be problematic (i.e. high energy users such as data centers).

• Int. 973, Lighting Retrofits and Submetering. Requires large tenants to be submetered and lighting systems to be upgraded during renovations (whether or not those renovations contemplate electrical work) or, at the latest, by 2025. Residential tenants are exempt. Renovations where construction costs are less than $50,000 are also exempt.

Other than the revisions to the Energy Conservation Code under Int. 564, the legislation applies to all New York City buildings larger than 50,000 square feet (or buildings that stand on the same tax lot and, together, are larger than 100,000 square feet).

• GGBP Passes City Council (Urban Green Council)