The press has been buzzing about new green building projects around the United States and evidence a trend that may be here to stay. One of the most recent high profile green projects is the recently opened 46-story glass and steel world headquarters of the Hearst Corporation in heart of New York City. The Hearst Tower received the Gold LEED Certified rating by the United States Green Building Council, and the Governor of New York also recently announced that all of the buildings in the new World Trade Center complex will be designed to meet LEED Gold certification standards.

SO YOU MIGHT ASK: WHAT IS ALL THE BUZZ ABOUT, WHO AND WHAT IS LEED CERTIFICATION, AND WHY SHOULD I CARE?

If you are in the real estate business and more particularly the real estate development business, if you don’t know about LEED certification, it is time to learn. With the heightened concern over energy prices, global warming and in an attempt to foster more earth friendly and cost efficient (note: there can be direct financial benefits as well!) building practices, a number of organizations around the world have been advocating for so-called “greener” or “sustainable” buildings and their advocacy has apparently gained a strong foothold in the United States, particularly with the Federal and many state and local governments. There is also a push coming from corporate America, where companies, consistent with their corporate philosophies and business strategies, are demanding more environmentally friendly and energy efficient products and buildings.

There have been a number of rating systems developed for how environmentally friendly and efficient buildings are such as the Building Research Establishment’s Environmental Assessment (BREEAM), the Comprehensive Assessment System for Building Environmental Efficiency (CASBEE), GBTool, Green Globes US, and the Leadership in Energy and Environmental Design (LEED) systems. The rating system that seems to have emerged as the leader and which has quickly, if not already, become the standard in the US is the LEED certification system. The LEED certification system was developed by the U.S. Green Building Council (the USGBC), a non-profit organization based in Washington D.C. whose website is at www.usgbc.org. The General Services Administration, most commonly referred to simply as the GSA, which acts as the administrator and manager of all of the federal government’s buildings, leases and facility needs, recently commissioned a study of all of the predominant environmental rating systems for buildings and in a report released in September of 2006 concluded that the LEED program was the “most appropriate and credible sustainable building rating system” for the evaluation of GSA projects and needs. This view has also been adopted by a number of state and local governments and many private corporations. Locally, there have been over 30 projects in Massachusetts certified under the LEED program ranging from the Manulife US Headquarters in Boston, Genzyme Center in Cambridge, a Shaw’s Superstore in Worcester, the Stanley Elementary School in Waltham, and the new Terminal A at Boston’s Logan Airport (a first for airports in the US).

SO YOU ASK: WHY SHOULD I CARE ABOUT LEED CERTIFICATION?

First of all, the federal government and many local governments have either already adopted or are currently contemplating adopting laws and policies that require, or at least encourage, landlords, developers and contractors that do business with them to meet LEED certification standards. According to the US Green Building Council, there are 46 Cities, 8 Counties, 16 States, 33 school districts and 9 federal agencies across the United States and Canada that have developed some type of LEED Certification requirement or incentive and that number appears to be growing fast. Across the country the types of incentives being offered include density bonuses, expedited permit reviews, reductions in development fees and other economic incentives. Massachusetts incentives include a density bonus being offered in the City of Acton, a recently enacted green building ordinance in the City of Boston (requiring large projects to be eligible for LEED certification), and tax incentive legislation being considered by the Commonwealth Legislature. Among potential tenants and purchasers of buildings, the certification also may ensure that the building is operating efficiently from an energy consumption standpoint which results in cost savings to the end users of a building as compared to buildings that are not energy efficient, and that the overall work environment will be cleaner and healthier for its employees.

So now you know why you should care and understand the trend with LEED certifications, but want to know the mechanics of it and what is involved. First, there currently exist LEED certification programs for only the following categories: new commercial construction and major renovation projects, existing building operation and maintenance, commercial interiors projects, core and shell development projects, homes and neighborhood developments, and currently a program for new retail construction is being developed. The rating system consists of a point system for categories of performance of the project and initially certain prerequisites must be met to obtain the basic certification, followed by a number of optional points awarded for various additional categories. The number of optional points awarded above and beyond the minimal prerequisites determines what level of certification the project receives. Currently there are four levels of certification: certified, silver, gold and platinum. The project owner or the designer that seeks project certification first registers the project with the USGBC and then submits information necessary to obtain the certification from the USGBC, including information on its design and information necessary for certification following the completion of construction. Points are awarded in the primary categories of sustainable sites, water efficiency, energy and atmosphere, materials and resources, and indoor air quality, along with additional points for innovative design and other environmentally friendly features and areas not covered by the primary categories. The rating system generally is performance based, rather than prescriptive, in an effort the proponents say is meant to encourage innovation.

WHAT IS THE COST OF THIS CERTIFICATION?

First, there is a basic project registration fee that is minimal, followed by the certification fee which is based upon the type and size of a project, and whether you are a member of the USGBC. The typical fees range anywhere from $1,750 to $22,500. However, getting to certification requires that a project be designed in such a way as to meet the standards of certification and therein lies the critical piece of the cost analysis. There are some advocates who claim that designing green does not significantly impact the overall cost of a project and over the life cycle of the building the cost savings more than pays for any initial increased project costs. Others estimate that the cost adds up to 5% or more in initial project cost and may have a less significant effect on the life cycle costs of the project, but every project and design is unique. That said, using a design professional that is knowledgeable of the LEED certification system is important if it is a goal for your project, and towards that end the USGBC has developed a training program for professionals, which includes a test on the rating system and its implementation. Once taken and passed, it results in a designation that the individual is a LEED Accredited Professional (sometimes referred to as a “LEED-AP”). Currently there are no eligibility requirements for taking the LEEP-AP test, and therefore it is open to anyone capable of studying and learning the material and its application, although the USGBC encourages a background in project management and green building and naturally the majority of test takers and LEED-APs are engineers and architects.

In summary, “LEED Certified” has become a buzzword in the building industry and has quickly been adopted by a number of both public and private entities as a guide and often a requirement for their projects. In addition, by following some of the guidelines included in the LEED program, projects often may achieve cost savings over their life cycle and result in healthier spaces for tenants and others to occupy. The LEED system continues to evolve and refine itself through the USGBC and forums and meetings that include a wide spectrum of interests including both public and private concerns and various design, development, and construction specialists. To the extent that the trend in adopting and implementing this certification program continues, LEED certification and the policies and goals that it reflects, will become more commonplace and may become the standard in the real estate and construction industries.