Going green Featured

7:00pm EDT December 26, 2009

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.

What recent changes have been made to LEED?

LEED v3 (2009) established many changes, including the introduction of regional priority credits. Before, there was no differentiation between where a building was constructed and the environmental issues in that location.

The LEED certification levels and processes have stayed the same, but the number of points needed to achieve each level has changed to a 100-point system. The levels are Certified, 40-49 points; Silver, 50-59 points; Gold, 60-79 points; and Platinum, 80 and above. There are 110 available points if you add the four regional credits and six innovative design credits.

The professional accreditation process also changed. Before, there was only one test under which people were accredited as LEED APs, and no experience was required. Now, three tracks have been created — LEED Green Associate, LEED AP and LEED Fellow — which allow people with significant experience to distinguish themselves.

What is included in the certification process?

The entire certification process is channeled through the Green Building Certification Institute (GBCI), so you need to work with someone experienced in the certification process to avoid unnecessary time and money spent on learning how the process works. There are five steps to certify a project: registering the project, preparing the application, submitting the application and documentation, having the application reviewed by GBCI and having the project certified.

An appeal process is available for points (also known as credits) denied by GBCI. Careful selection of the credits sought is vital to certification to avoid later appealing denied credits. Have knowledgeable people help you understand the requirements for each rating system’s prerequisites and credits and use all resources available. Your team should include designers, architects and legal counsel to help you make design and construction decisions early in the process to maximize financial resources and to advise you on the legal issues.

What does the future of LEED look like?

By 2010, industry analysts estimate that approximately 10 percent of commercial construction costs will be allocated to LEED and green projects. We are also seeing discussions by local governments to require LEED for private projects. LEED will take center stage as the discussion on the energy crisis, global warming and the search for alternative fuel sources continues.

Cristina E. Spicer, LEED AP, is an associate in the real estate group at Greensfelder, Hemker & Gale, P.C. Reach her at (314) 335-6827 or cs@greensfelder.com.