Hawaii Green Building Law

The Obama administration announced yesterday its campaign to make lamps and lighting equipment use less energy.

The new rules, which would take effect in 2012 would apply to fluorescent and incandescent lamps, which represent 37 and 7 percent of lighting energy use respectively.

Electricity use by fluorescent lamps would decrease by 15 percent, while electricity use in incandescent lamps would drop by 25 percent. The Obama adminstration projects that the standards would save up to 594 million tons of carbon dioxide emissions through 2042.

Obama said the new efficiency standards he was announcing would result in substantial savings between 2012 and 2042, saving consumers up to $4 billion annually, conserving enough energy to power every U.S. home for 10 months, reducing emissions equal to the amount produced by 166 million cars a year, and eliminating the need for as many as 14 coal-fired power plants.

The president also said he was speeding the delivery of $346 million in economic stimulus money to help improve energy efficiency in new and existing commercial buildings.

The proposed energy legislation must still pass the Senate.

On Monday, Congressman Neil Abercrombie projected that stimulus money and clean energy legislation still pending before Congress would send an estimated $620 million in investment funds for green jobs to Hawaii, and create 7,000 jobs in the islands.

The question that remains unanswered is where will Hawaii find workers that are adequately trained to fill the proposed green jobs. A recent study by the Association of Energy Engineers predicts a serious shortage of green energy skills due to a lack of training and an aging base of energy professionals. According to the study:

• Forty-one percent (41%) of the energy professionals who were surveyed plan to retire in the next ten years.
• Seventy-two percent (72%) of energy professionals indicate a heightened shortage of qualified professionals in the energy efficiency and renewable energy fields in the next five years.
• Seventy percent (70%) of energy professionals indicate a need for national and state training for “Green Jobs” to address job shortages that are impairing growth in green industries, such as energy efficient buildings and construction, renewables, electric power, smart grid, energy efficient vehicles and biofuels development.

So far, Hawaii lawmakers have been unable to enact legislation proposing to appropriate federal stimulus funds to develop a green collar workforce. Meanwhile, there are few programs for students seeking green training. Even where there are programs, students are often lured away to fill green jobs before graduation.

Untrained or inadequately trained workers add to the risks associated with green building. The costs of building green are high. In turn, developers’ expectations as to the end product are large. In addition, results are unpredictable due to the use of new technologies and third-party certification standards such as LEED and Green Globes.

New technologies + high costs + high developer expectations + unpredictable results + untrained workers = a perfect storm that is ripe for litigation. Training skilled workers is necessary before thrusting them into green building projects. All stakeholders should be aware of the risks and liabilities of green development, including the risks associated with employing inadequately trained workers.

It is the end of CIRs as we know it. As reported by Real Life LEED, starting today credit interpretation rulings will be project specific and applied on a case by case basis.

As stated by the United States Building Council:

Effective June 26, 2009, credit interpretation requests (CIRs) submitted by any registered project will no longer be vetted by USGBC or its LEED Technical Advisory Groups. As a result, CIR rulings will now be applicable only to the project that submitted them. For LEED version 2 projects, rulings on CIRs submitted prior to June 26, 2009, will be honored until they are retired by USGBC or incorporated into general USGBC-issued project guidance, such as through errata or addenda.

The credit interpretation request and ruling process allows Project Teams to obtain technical and administrative guidance on how LEED requirements including minimum program requirements, prerequisites, and credits pertain to their projects. For instance, after receiving a Project Team’s request, the USGBC recently ruled that Forest Stewardship Council-certified bamboo plywood and flooring can be included in calculations under Credit MRc7: Certified Wood.

Previously, all CIR rulings were precedent setting and were referenced in the CIR database. Accordingly, the CIR ruling would apply and be available to other projects registered by other LEED Project Teams. The prior CIR process gave project teams the ability to rely upon how the USGBC applied credits to past projects.

The result of the new policy is less predictability. A Project Team can no longer rely on the fact that a credit that was favorably interpreted on one project will be applied the same way in a subsequent project.

It has never been wise for a stakeholder to guarantee that a project will obtain a specific credit or attain a certain LEED certification. The new CIR rules add to the unpredictability. LEED is changing and because only the USGBC determines certification neither a developer, an architect, a contractor or an engineer can guarantee that a building will receive certification. If they do, they could be setting themselves up for liability.

In order to address the risks and liabilities associated with green development, contracts should be drafted by attorneys with knowledge of LEED certification requirements.

While the potential routes, technologies and costs of the City and County of Honolulu’s rail project remain hot button issues, the decisions that are ultimately made will effect the greening of Honolulu.

Rail projects across the country have spurned transit-oriented development projects, many of which include LEED certified buildings and other green developments. Transit Oriented Development is typically defined as development within a quarter to a half a mile of a transit stop, whose design is oriented toward improving access to and use of transit.

The planning of potentially green projects in Hawaii has already started. Kamehameha Schools revealed plans for the redevelopment of Kakaako. According to Kamehameha Schools, the proposed Kakaako project balances the ideals of an urban village with the solemn duty to be responsible stewards of the land.

While we can look forward to green transit-oriented developments stemming it will be important to define what makes a good transit-oriented development. For instance, the Sheridan Stationside Village Project in Hollywood, Florida includes a reduced parking footprint and more than 400 parking spaces for bicycles. The development encourages less dependence on cars and greater use of mass transit, including rail, bus, and shuttle service.

In contrast, a LEED-Platinum office building adjacent to a mass transit station in New Jersey features several green design elements but includes a parking garage for 1100 cars.

While not specifically intended for transit-oriented development, the LEED for Neighborhood Development (LEED-ND) certification program for “green neighborhoods” provides a set of standards setting forth that certified developments must be compact, intelligently located (in existing urban cores, for example), reduce automobile dependence, be convenient for pedestrians and bicyclists, and should include green building technologies. In an effort to spawn effective transit-oriented development the legislature should consider providing incentives for developments that encourage transit ridership by achieving LEED-ND certification or implementing plans to decrease dependence on cars.

What do CitiGroup, Wal-Mart, Subway, Toyota and Dunkin Donuts have in common? Each company, in addition to companies across the country has built a “green” store or is a tenant in a “green” development. Several corporations are mandating that their corporate headquarters be located within LEED certified buildings. According to the National Real Estate Investor, “more and more companies are recognizing the business case for sustainability” which includes paying premium rent for occupying “green” office space.

As green development grows, green leasing will also increase. So what is a “green” lease? In an earlier post we discussed the difficulty of defining the term “green building.” Green leasing similarly does not have a standard definition. Nevertheless, there are significant sustainability and liability issues that must be clarified when establishing the landlord-tenant relationship for a LEED certified property or green development. So when you’re leasing green, the typical form lease will not apply.

A green lease should address annual operating charges, energy use and efficiency, water conservation, recycling requirements, tenant build outs, maintenance and repairs, operating expenses, operational performance, transportation, hazardous materials and green cleaning products and applications. We will discuss these issues separately in future posts.

Most landlords, tenants and property managers have not confronted the legal issues that are presented in leasing green property. One example, according to Frank Musica’s presentation “Don’t Let Green Design Cause Red Ink” is
that of a tenant that contracted with the government to provide military systems designs and terrorism identification services. The green aspects of the tenant’s space included extensive daylighting systems. The government later determined that the windows and skylights placed confidential information at risk and threatened to revoke the tenant’s security rating, cancel existing contracts and prevent future consideration. The potential liability stemming from the building’s sustainability aspects typically is not specifically addressed in the normal landlord-tenant relationship.

The lease is a critical document setting forth the relationship between the parties and the terms of occupancy. The parties to the lease must be aware of the sustainability issues related to the property and should tread lightly as careful drafting is required to address green building issues.

Will increasing numbers of green building projects create a wave of litigation? While legal commentators have been predicting a boom in lawsuits, green claims are already here.

Here is a brief summary of just some of the actual green claims brought against engineers and architects, according to Frank Musica, an attorney at insurance underwriting manager Victor O. Schinnerer & Co. in Chevy Chase, Md.

-Claim that windows in a university library designed to bring in fresh air instead brought in air contaminated by pigeon droppings that accumulated under a rooftop solar shade.

-Mold issues related to moisture retention of cork flooring.

-Construction delays caused by the unavailability of a specific green building product recommended by an architect.

-Completed project’s failure to reduce energy costs as required in a design contract.

-Alleged negligence of an architect for specifying a solar shading system that was covered by an enforceable patent.

Green building disputes spread much further than liability for a project’s failure to acquire a specified LEED certification. The risks are real and each party involved with a green building project must consider the risks and benefits in submitting bids and negotiating contracts. Stakeholders should consult with counsel with knowledge of green building certification.

A bamboo pavilion at Hana High and Elementary School was recently completed.

Renovation Nation films Hana School’s Bamboo House by Bamboo Living from Bamboo Living on Vimeo.

Bamboo Living , who designed and prefabricated the building, touts bamboo as having twice the compression strength of concrete and a greater strength-to-weight ratio than steel.

Is bamboo the building material of the future? Known as the poor man’s timber in Asia, its use is widespread. On a visit to Hong Kong I was struck by the use of bamboo as scaffolding, even on skyscrapers 20 or more stories tall. My first thought was that bamboo as scaffolding would not be permitted in the United States due to safety concerns. Similarly, I wonder whether bamboo as a building material is incorporated into current building codes.

Bamboo Living points out that it is “the world’s first and only internationally code certified (ICC-ES) bamboo building company.” However, as blogger Shari Shapiro recently highlighted, building codes may not be uniformly adopted in all jurisdictions, which is why California does not allow for residential construction using aerated concrete, an eco-friendly building material that has been used in Europe for over 70 years.

Building codes and builders alike face the challenge of keeping pace with recently recognized (though perhaps not recently developed) sustainable building practices while balancing the ability of new techniques to withstand fire, hurricane, earthquake, etc.

Ideally building materials would be obtained regionally. Hawaii’s climate is certainly suitable for growing bamboo. However, in the case of the bamboo schoolroom on Maui, the bamboo was not locally grown but was shipped from Vietnam, thereby perhaps leaving a larger carbon footprint than necessary.

Further reading:

• CNN.com: Can bamboo tackle environmental and poverty concerns?
• The Maui News: Hana’s bamboo pavilion to get national attention
• Bamboo Living: Bamboo Living Helps Build Nation’s First Sustainable Bamboo School

The past legislative session witnessed the passage of several “green” bills which are now awaiting signature by Governor Lingle.  The Honolulu Advertiser recently summarized some of this session’s major initiatives, including the following legislation:

Food and energy security (HB 1271 HD3 SD2 CD1)

Increases the “barrel tax” on each barrel of petroleum product sold by a distributor from 5 cents to $1.05. Allocates portions of the taxes collected to various funds to promote renewable energy and protect agriculture.

 

Green schools (HB 986 HD1 SD1 CD1)

Requires construction and renovation of public school facilities to meet the Collaborative for High Performance Schools standards. Requires replacement of old portable buildings with high performance classrooms.

 

Renewable energy (HB 1464 HD3 SD2 CD1)

Provides for and encourages renewable energy use and development, and energy efficiency, including increasing requirements for renewable energy portfolio standard, expanding duties of the energy resources coordinator, establishing energy efficiency portfolio standards, requiring energy-efficient state buildings, requiring sellers to provide electricity-cost information, and appropriating funds from the Renewable Energy Facility Siting Special Fund.

 

Clotheslines (SB 1338 SD2 HD2 CD1)

Allows the use of clotheslines on any privately owned single-family home or townhouse.

 

Hybrid vehicles (SB 2 SD2 HD2 CD1)

Establishes the development of energy efficient vehicles as a state policy goal. Requires the designation of parking spaces for electric vehicles. Requires state and county agencies to follow a priority list when purchasing energy-efficient vehicles.

 Any thoughts on whether the governor will veto any of these measures?  And, if so, whether the support exists in the House and Senate to override any such veto? 

It is notable that the legislature has had the willpower to increase the tax on oil as the public is already facing a 10 cents per gallon or more spike at the pump when the general excise tax on ethanol expires in July.

The prohibition on prohibiting clotheslines is also interesting as it has been many years in the works.  I understand previous measures to outlaw clothesline prohibitions had been opposed due to the unsightliness of clotheslines, particularly in in golf course and resort communities which might be depicted on a nationally televised golf tournament and portray the wrong “image” for the state’s visitor industry.  Under the current bill, condo and community associations may may still “adopt rules that reasonably restrict the placement and use of clotheslines” so long as it is not an outright prohibition.

The passage of these bills in an economic downturn amidst across-the-board budget cuts is encouraging, but their impact remains to be seen.

Hawaii foreclosures spiked nearly 400 percent in May and the state now ranks 15th in the nation for foreclosures, according to Pacific Business News. Could harnessing the sun provide a solution to this rising foreclosure rate?

An article recently published in Forbes proposes applying federal funds, earmarked for loan modifications under the Making Home Affordable Plan (MHAP) and using the funds instead to support the installation of solar photovoltaic panels on the roofs of distressed homeowners.

The proposal envisions using the sun’s free resources to add value to homes facing foreclosure. The proposal assumes that a borrower received a $225,000 mortgage loan on a $250,000 home ago at a fixed rate of 8.5%. Today, if that home’s value has declined by 25% to $187,500, then the borrower’s loan-to-value ratio (LTV) has increased from the original 90% to 117%. According to the article:

Installing the system on this home’s roof will produce two primary benefits. The homeowner will no longer pay for electricity even as rates rise, and the value of the home will increase thanks to the future generating capacity of the solar panels. That value has been estimated at about 20 times the annual electricity savings. (This result can be approximated using a discounted cash flow analysis of the government’s forecast electricity costs over the next 30 years.) In this case, the home’s value should now be assessed at about $212,500, or $187,500 + $25,000 for the solar PV system….

At $212,500 for the home’s value, the LTV ratio drops to 103%. This alone would be enough to secure a refinancing with Fannie or Freddie were the mortgages already owned by one of these government-sponsored enterprises, as stipulated in the MHAP.

This is a novel approach and it would result in the expansion of green jobs. However, I don’t agree with the idea of adding value to distressed properties, particularly those where borrowers could not have afforded the loans to begin with. Also, the proposal would require lenders to agree to forestall collection efforts for several months while the delinquent borrower made arrangements for the installation of photovoltaic panels and realized any cost savings from reduced electrical bills.

In prior posts, we discussed President Obama’s efforts to stimulate the economy by creating “green jobs.”

Although legislation to create a “green-collar” workforce stalled in the Hawaii legislature, the idea has trickled down to the City and County of Honolulu. Resolution 09-57 requests that Mayor Mufi Hannemann apply for Federal Stimulus Package Funds, specifically energy grants, to help retrofit municipal buildings to be more energy efficient. Council Member Donovan Dela Cruz wrote about the introduction of the Resolution yesterday in the Hawaii Reporter.

According to the Resolution “the [city] council believes that investing in renewable energy projects will also help our local economy recover by creating more jobs….”

Several states and municipalities have pushed to apply stimulus funds to create green jobs. For instance, California’s “Green Corps” will place at least 1,000 at-risk youth aged 16-24 into green jobs over the next 20 months.

The pending Resolution does not specify the requirements of the proposed energy retrofits. In order to create long-term growth of a green economy it is essential to fund projects of a large enough scale so that they can create multiple jobs and training opportunities.