Joining us at this morning’s panel is Darren Prum from UNLV, Senator Daniel Clodfelter from North Carolina, and Chris Cheatham from Watt, Tieder, Hoffar & Fitzgerald.
State-Level Green Building Initiatives have the potential to promote and further the development of green building. The diverse panel brought together individuals from the academic, political and professional world. The panel was able to provide an excellent overview of these initiatives and the corresponding issues and problems.
William & Mary School of Law Professor Ronald Rosenberg served as the moderator and helped to foster a terrific dialogue.
Each panelist gave a short presentation followed by a Q&A session.
Prum: Creating State Incentives for Commercial Green Buildings
Prum provided an overview of the of Nevada’s approach to Green Building Incentives, both in the public and private sectors.
Nevada has a part time legislature, meeting only in odd number years. Nevada also has no state income tax. In 2005 a plan was put together to incentivize green building in Nevada; subsequently Nevada became the second state to require Sate government to build 2 LEED Silver or higher buildings each 2 year cycle. The incentives were a 2% reduction in taxes. Implementation became a problem because the only requirement was that a developer had to have the idea prior to December 31, 2005 and the whole project was considered, rather than single buildings.
The LEED projects in Nevada went from 14 in 2005 to 92 in 2007. Owners were getting 3 dollars for every 1 spent on green building, resulting in a 940 million dollar loss over the next 2-year period.
As a result of this the state came to a compromise bill that eliminated the sales tax incentive and revised the property tax incentive; this incentive required strict adherence to the LEED standards. The new program focuses on property tax incentives ranging from no abatement to a 25% abatement over 10 years. This is crucial in Nevada since the state has no income tax. Several other states, including New York and Oregon are using this type of financial incentive programs.
Senator Clodfelter: North Carolina Issues
North Carolina’s legislature has a great deal of activity in the area of green building, especially in water efficiency and conservation. The collapse of the aquifer, which supplies water for the Eastern portion of the state, has made this especially important in the last few years. The state has utilized incentives, mandates, and education and out reach.
North Carolina has developed the Healthy Built Homes standard for green building in North Carolina, available a healthybuilthomes.org. The program is more stringent than LEED, but is still a voluntary standard.
The state is heavily dependent on income tax, and is constitutionally prohibited from using property tax to incentivize green building. So, the state relies on income tax incentives. There has been a debate going on concerning a straight income tax credit for green buildings, the main obstacle has been whether to use the state developed standard or national standards, such as LEED or Green Globes. The problem of multiple standards is the primary problem.
North Carolina has permitted local governments to forgive/rebate permitting fees for buildings that met LEED standards, once again the standard applied became an area of contention, but to solve this the State included both the state and national standard.
State agencies have also begun converting existing systems in buildings to increase efficiency for water and power, this has been really successful; the only hurdle has been the cap on the amount that could be spent.
The state has also mandated energy use has to be 30% more efficient than the 2004 edition, as well as increases in water efficiency and any new building projects must submit plans to eliminate outdoor potable water use. Any developers failing to meet this mandate must submit a corrective action plan after an audit.
The Senator takes the position that existing buildings represent the greenest buildings, since they require no new development, no new materials, and no waste of resources. A problem is that strict building codes require buildings that don’t meet certain mundane standards, such as lengths of timber, to be torn down rather than rehabilitated. The State enacted a program that encouraged good judgments in granting variances to the building codes. The program has been predominantly used in larger cites and has been very successful. This has been an important tool in refurbishing older parts of the cities.
Most important policy change in North Carolina to further green building has been Senate Bill 3, which included a renewable energy portfolio standard. The most important part is the decoupling of electrical utilities production of power with the amount they pay. The companies can earn a return in renewable energy, demand reduction and energy efficiency; something that was not possible under the old regulatory model. The companies now have the incentive to build supply chains for renewable energy. The Senator thinks that incentivizing and decoupling have been the most important policy changes in North Carolina.
Chris Cheatham: State Standards
The Dillion rule makes it impossible for local governments to create building codes to require green buildings. Instead the state is mandating the LEED certification standard for certain buildings, which creates a problem because this standard is changing evey 2 years.
Mr. Cheatham thinks that green building strategies should be incorporated into their building codes instead of requiring LEED certification for certain buildings.
Q&A Session:
Q1: to Sen. Clodfelter→ talk about pilot program for local buildings code.
A1: Area of mill housing had difficulties because it was impossible to get the homes up to building code standards and so the neighborhood went into decline. So the State asked for variances under the pilot program, and as a result the area is now an arts district with over 300 million in investment. Thus, preventing urban sprawl and reducing crime.
Another project was a corporate headquarters that had been abandoned since 1985, and was now not up to code. With variances under the pilot program a new corporation filled the building and utilized the space.
Q2: Are there requirements under this pilot program that specifically deal with green building?
A2: no, but the main point is to expand what one considers green building, because reutilizing spaces, while not “green” specifically,” is in fact green.
Q2: when local governments reimburse zoning fees does the state reimburse the localities?
A1: No, it’s a voluntary system that the state encourages the localities to initiate, but it is “on their own nickel.”
Q3: to Mr. Prum, same question.
A3: the state does reimburse local school districts, but not the counties.
A3: Mr Cheatham→Feebates in Oregon could be a possible solution.
Q4: how will President Obama’s support for green initiatives affect States use of the new funds in the stimulus package?
A4: Mr. Cheatham→ there will be some problems as states try and figure out how to appropriately apply the money.
A4: Mr. Prum→Nevada is ready to go and has a several billion dollar backlog in projects that are ready to go and just need funding.
A4: Sen. Clodfelter→there is some concern about what projects are ready to go and just need funds, because these projects are not necessarily green, but there is an existing green business fund that the Senator hopes to put some stimulus money toward.
Q5: how do states standards vary from LEED as far as quantification? Why did NC insist on having a state standard?
A5: Senator it started as a way of enticing small scale builders evolved into a separate certification standard
A5: Mr. Cheatham→certification starts with the design phase, and certification occurs at the end of the project.
A5: Sen. Clodfelter→the system in NC is a performance based system that may be audited later.
3 Comments
Both Prum & Clodfelter talk about constitutional restraints on incentivizing Green Building. State constitutional provisions and tax law prevent effective incentives for green building. To the extent that changing individual behavior is really at the heart of the issue, it seems that state law is in its own way. It hardly seems that politicians will campaign on a platform of “Vote for me to change the tax and zoning law so that, you, the constituents, might find green building more attractive.”
If progress is to be made on the issue, therefore, it must be done at bureaucratic, technocratic, and intra-legislature level. If progress is made there, it is not at the level of citizens, individuals, and business in a position to make green building decisions. So are changing state standards for naught?
Cheatham feels that LEED certification is a market transformation tool because LEED changes its rating system every two years. He posits that building code changes will be more appropriate and more adaptable to the future. Particularly he feels that energy efficiency mandates are probably the best way forward. Green building, though, is not just about energy efficiency. Would such changes narrow the focus of VA green buildings too much?
During the panel, one prevalent theme was the differences that exist between states in respect to the initiatives that they implement and the areas of “green” they concentrate upon. The panel appeared to view these differences as a positive, under the premise that the state is in the best position to tailor programs to meet particular needs. The problem arises when State Governments are inefficient, or perhaps are deadlocked in partisan politics; would a national, universal approach be more prudent?