Going green

Building to Leadership in Energy and Environmental Design (LEED) standards can lower your operating costs, earn tax credits and incentives, reduce your carbon footprint and enhance your reputation.

LEED is a third-party green building certification system developed by the U.S. Green Building Council to make buildings more environmentally friendly. Although it may be required in certain jurisdictions, LEED serves as the voluntary national standard for building sustainable buildings. LEED aims to identify and implement nationally recognizable green building strategies and performance criteria for the design, construction and operation of sustainable buildings.

“LEED and sustainable construction have become more than just a trend,” says Cristina E. Spicer, LEED AP, associate in the real estate group at Greensfelder, Hemker & Gale, P.C. “LEED buildings penetrate all aspects of our personal and professional lives. You need to be aware of changes in the building industry so you’re not left behind.”

Smart Business spoke with Spicer about what you should know about LEED certification and the risks and benefits of building to LEED standards.

What key things should a business leader know about LEED?

LEED is administered by a third party, which is under no obligation to certify a particular project or to a particular standard. It’s crucial that you have adequate protection and properly allocate risks through well-drafted contracts and obtain adequate insurance for the project. Also, be aware of the financial resources available so you can maximize the bottom line. Building to LEED standards can cost from 0.5 percent to 10 percent more than traditional construction projects, so it’s crucial to be aware of the benefits to offset costs.

What are the risks and benefits of building to LEED standards?

There are more green and sustainable products available now, but there is a risk that these will not work as intended. Address all warranty issues on the front end to make sure risks are properly allocated. There are legal risks, such as knowing when LEED is required or what to include in a contract, such as defining the parties’ expectations, the standards sought, the parties responsible for administering the LEED certification process, warranties and representations of the parties, and legal remedies for foreseen and unforeseen consequences, such as failure to achieve a certain level of LEED certification. The financial bottom line also becomes a risk that increases if the project’s goals and anticipated performance are not clearly stated and pursued from the beginning. The decision to build green or LEED should be made as early as possible to avoid costly changes during design and construction.

However, the benefits are numerous. The USGBC estimates, on average, operating costs decrease 8 to 9 percent, building values increase 7.5 percent, return on investment increases 6.6 percent and occupancy ratios increase 3.5 percent. There are also tax credits, deductions, grants, exemptions and accelerated depreciation schedules, which can be coupled with other financing options and traditional tax credits to maximize your financial benefits. There are also environmental benefits, such as improving indoor air quality, and intangible benefits, such as reputation, improved absenteeism and occupants’ health and well-being. You will reap more benefits the longer you hold on to the building.